Case by case Legal risks of entering into a contract with an agent who is not authorized

Mondo Social Updated on 2024-02-01

On June 30, 2008, the Hainan Provincial Bureau of Agricultural Reclamation issued the "Opinions of Hainan Provincial Bureau of Agricultural Reclamation of Hainan Natural Rubber Industry Group Co., Ltd. on the Handling of Closed Rubber Factories and Surviving Old Rubber Factories in the Reclamation Area" Qiongken Bureau Gong Jian Zi 2008 80 Document, closing the Lingmen Farm Rubber Factory in Lingshui County and no longer producing and operating. The Hainan Provincial State-owned Lingmen Farm Committee of the Communist Party of China issued the "Notice of the State-owned Lingmen Farm Committee of the Communist Party of China on the Appointment and Removal of Wu Chuan and Other Notices" Lingdang Zi 2009 No. 63 document, and hired Comrade Zeng Fanyun as the head of the rubber transfer station. On August 1, 2012, Zeng Fanyun (Party A) signed the "Cooperation Agreement" with Wu Handong (Party B) in the name of the rubber transfer station, which was agreed as follows: "1. Party A will provide the warehouse and original workshop of Lingmen Farm Rubber Factory in Lingshui County, as well as part of the site outside the plant (except for the two-story working building and loading platform, rubber pool, water tower and current operation space applicable to the rubber factory) to Party B for fish processing and production, such as Party B's production of national contraband, or debt disputes. Party A does not assume any legal responsibility. ......3. The term of cooperation is: from November 1, 2012, if it is due to force majeure or due to urban planning and construction and national and farm development and requisition, it can be terminated by itself. Party A shall not make any compensation for the losses caused to Party B. ......Fourth, as agreed by both parties A and B, Party A takes the above-mentioned plant and part of the site as the basic conditions for cooperation, Party B must provide 3 to 5 employment opportunities for laid-off workers in the field, and pay three thousand yuan (3,000 yuan) as an environmental sanitation management fee to Party A every year, and the payment form is: a one-time payment of management fees in cash before November 1 of each year. 5. Party B shall not affect or interfere with the daily operation of Party A and the daily life of the employees living in the factory during the cooperation period, and Party A has the right to terminate the cooperation agreement if the above situations occur or violate the agreement. ......There is only the signature of both parties A and B at the place where the agreement is settled, and there is no signature or seal of Lingmen Farm. At the time of the signing of the agreement, Zeng Fanyun clearly stated with Wu Handong that the agreement must be approved by Lingmen Farm, and Wu Handong also agreed, but in fact Wu Handong did not report to Lingmen Farm for approval. After the agreement was signed, Wu Handong registered and established Hainan Lingshui Yunda Breeding and Breeding in early 2013 and purchased a set of fish processing and production equipment, renovated the plant and other ancillary facilities for the fish processing plant, began to process fish without legal approval, and hired several employees of the original rubber factory. On October 20, 2012 and October 25, 2013, Zhuo Duolong and Tan Fei respectively issued receipts to Wu Handong, which read: "I have received RMB 3,000 from Wu Hanzhong (i.e., Wu Handong) today (for the daily hygiene management expenses of the factory)". On September 10, 2013, due to the illegal operation of the fish feed processing and affecting the surrounding environment, it was investigated and dealt with by the Land and Environment Resources Bureau of Lingshui Li Autonomous County and Lingmen Farm, and issued the Lingtu Environmental Resources Supervision No. 190 2013 "Notice of Ordering to Stop Illegal Acts", which stated the following: "Huang Zhan: You (the unit) processed fish feed in the Lingmen Farm Former Rubber Factory without approval in accordance with the law, which violated the provisions of Article 3 of the Environmental Impact Assessment Law of the People's Republic of China. The provisions of Article 31 of the Environmental Impact Assessment Law of the People's Republic of China hereby order to immediately stop the above-mentioned illegal acts and wait for handling. The notice was signed by Huang Zhan. However, Wu Handong did not stop production and continued to produce fish feed. At the beginning of November 2014, Lingmen Farm received complaints from the public, alleging that some people were processing fish feed in the factory building of a rubber factory that had long been idle, and the sewage and rancid fume discharged seriously polluted the air. On November 10, 2014, Lingmen Farm issued a Notice on Stopping Feed Processing and Production to the fish feed processing factory involved in the case and posted it on the outer wall of the plant, stating the following: "Comrade Wang Caiya: You have not been approved by the farm and have not gone through the relevant formalities such as the environmental impact assessment report, business license, industrial and commercial registration, and tax registration required for the construction of the factory in accordance with national regulations. Unauthorized opening of a feed processing plant in the former rubber factory of our field. In the past half a month, the processing of feed every night emitted dirty gas, the smell was unpleasant, and the surrounding people had difficulty breathing, seriously polluting the rubber factory...The air within a radius of several kilometers has had a negative impact on the health and production and life of the workers in our field, and has aroused strong reactions from the workers. You are hereby ordered to immediately stop all feed processing and production in the rubber factory building from the date of notification....On December 4, 2014, Lingmen Farm issued the "Notice on Ordering the Termination of the Processing of Rancid Fish Again" to the fish feed processing plant involved in the case and posted it on the outer wall of the factory, stating: "Comrade Wang Caiya: Recently, according to the feedback of the workers, after our field and Lingshui Lingmen Investment *** to the field inspection, you once again pulled rancid fish in the rubber factory building for processing and production, and the sewage and rancid gas excluded by the processing and production were seriously limited to the life and health of the surrounding workers, and caused a strong reaction from the workers. Therefore, I once again order you to immediately stop all feed processing and production in the rubber factory building from the date of notification, and to dismantle your processing equipment within 7 days. Otherwise, you will be responsible for all the consequences. On December 8, 2014, Lingmen Farm sent a letter to the Land and Environment Resources Bureau of Lingshui Li Autonomous County requesting that the rancid fish feed processing plant be banned in accordance with the law, saying that because Lingmen Farm did not have the law enforcement power to ban the production of feed by its processing plant, it requested the Lingshui Li Autonomous County Land Environment and Resources Bureau to ban the processing plant in accordance with the law. On December 31 of the same year, Lingmen Farm took measures to block the gate of the rubber factory and posted a notice next to the gate, stating that the rubber factory building was a state-owned asset and that Lingmen Farm had never been contracted to anyone for production and operation.

Wu Handong and Hainan Lingshui Yunda Planting and Breeding *** filed a lawsuit, requesting to terminate the cooperation agreement signed with the state-owned Lingmen Farm in Hainan Province and compensate for the losses of 2,145,700 yuan due to the illegal acts of the state-owned Lingmen Farm in Hainan Province, and the case acceptance fee was borne by the state-owned Lingmen Farm in Hainan Province. Hainan Provincial State-owned Lingmen Farm entrusted our lawyer to participate in the lawsuit. The court of first instance rejected all the litigation claims of Wu Handong and Hainan Lingshui Yunda on the grounds that the state-owned Lingmen Farm in Hainan Province was not at fault for the invalidity of the contract, and the suspension of production of the fish feed processing plant was not caused by the state-owned Lingmen Farm in Hainan Province, and the case acceptance fee was 239656 yuan is borne by Wu Handong and Hainan Lingshui Yunda planting and breeding.

1. Hainan Province's state-owned Lingmen Farm has never had a cooperative relationship with Wu Handong and Hainan Lingshui Yunda Planting and Breeding, and Zeng Fanyun's signing does not constitute an apparent appearance.

According to the law, the prerequisite for constituting an apparent ** is that the actor must conclude a contract in the name of the person being **. The rubber factory is a second-level enterprise under Lingmen Farm and does not have independent legal personality. Without the authorization and approval of Lingmen Farm, Zeng Fanyun had no right to lease or cooperate with state-owned assets such as the factory buildings of the rubber factory. The cooperation agreement signed with Wu Handong only signed his personal name, and did not affix the official seal of Lingmen Farm, and then did not charge any fees to Wu Handong and Hainan Lingshui Yunda in the name of Lingmen Farm, so Zeng Fanyun's signing behavior does not constitute an appearance, but is purely a personal act. Because Zeng Fanyun did not ask for instructions and report to Lingmen Farm before and after signing the contract, Lingmen Farm had no knowledge of Wu Handong and Hainan Lingshui Yunda's transformation of rubber factory buildings, installation of equipment, and production. In early November 2014, after receiving complaints from the masses, they sent people to investigate.

2. The blockade of the gate of the rubber factory by Lingmen Farm on December 31, 2014 was purely an act of managing state-owned assets in accordance with the law, and there was no fault in any way.

3. The so-called losses of Wu Handong and Hainan Lingshui Yunda Planting and Breeding are only unilaterally counted and have not been assessed and appraised by any statutory appraisal agency.

The court of first instance ruled that all the litigation claims of Wu Handong and Hainan Lingshui Yunda were rejected, and the case acceptance fee was 23,9656 yuan is borne by Wu Handong and Hainan Lingshui Yunda planting and breeding.

The court of first instance held that:

1. Whether the "Cooperation Agreement" signed by Zeng Fanyun and Wu Handong is valid, and whether Zeng Fanyun's behavior constitutes a prima facie**. The rubber factory was originally a subordinate organization of Lingmen Farm, and the plant equipment of the factory belonged to the fixed assets of Lingmen Farm. Zeng Fanyun's transfer of the rubber factory building to Wu Handong for fish feed processing was not authorized to dispose of it, and the consent of Lingmen Farm should be obtained, but Lingmen Farm did not posthumously recognize it, so the Cooperation Agreement should be invalid. On the question of whether Zeng Fanyun's behavior is superficial. According to Article 49 of the Contract Law, the composition of an apparent act not only requires that the act of having no right objectively form the appearance of having a right, but also requires the counterpart to form a subjective right. In this case, Zeng Fanyun signed the Cooperation Agreement with Wu Handong in the name of the transfer station, and also informed him that the agreement required the consent of Lingmen Farm, and the signing of the Cooperation Agreement was only signed by Zeng Fanyun himself, without any official seal of Lingmen Farm, so Wu Handong failed to fulfill his duty of reasonable care, that is, the counterparty was negligent or negligent in the actor's lack of rights, which was not good faith and no negligence, so the Cooperation Agreement was an invalid contract. However, the premise for terminating the contract is effective cooperation, so this court does not support Wu Handong's litigation request to terminate the "Cooperation Agreement" signed by Zeng Fanyun and him.

2. Whether Lingmen Farm should compensate Wu Handong and Hainan Lingshui Yunda for the loss of 2,145,700 yuan for its inability to produce. First of all, according to Article 58 of the Contract Law, "after a contract is invalid or revoked, the property acquired as a result of the contract shall be returned; where it cannot be returned or it is not necessary to do so, compensation shall be made at a discounted price. The party at fault shall compensate the other party for the losses suffered thereby, and if both parties are at fault, they shall each bear corresponding responsibility. "The cooperation agreement involved in the case is now confirmed to be an invalid contract. According to this article, the party who is subjectively intentional or negligent shall compensate the other party for the property loss caused to the other party due to the invalidity or revocation of the contract. In this case, the cooperation agreement was signed by Wu Handong and Zeng Fanyun, and the two of them orally agreed at the time of signing the agreement that Wu Handong would apply to Lingmen Farm and Lingmen Farm would approve it before it would take effect, but Wu Handong established Yunda Company without applying to Lingmen Farm and without obtaining the consent of Lingmen Farm, and transformed the factory involved in the case into a fish feed processing plant on his own. Wu Handong carried out processing and production without obtaining a legal production and operation license, which was Wu Handong's own illegal act and was ordered to stop production by the law enforcement department. Lingmen Farm was also ordered to stop production based on Wu Handong's illegal production and blocked the gate of the factory first, so Wu Handong's suspension of production was not caused by Lingmen Farm. Secondly, Wu Handong failed to provide evidence to prove that his suspension of production loss was 2,145,700 yuan, and Wu Handong and Hainan Lingshui should bear the adverse consequences of failing to provide evidence. Regarding the Lingshui Li Autonomous County Bureau of Land, Environment and Resources, Wu Handong's order to stop production of Wu Handong's fish feed processing factory, Wu Handong was aware of the issue. Although the counterpart of the Lingtu Huanzi Zi 2013 No. 190 "Notice of Ordering to Cease Illegal Acts" issued by the Land Environment and Resources Bureau of Lingshui Li Autonomous County on September 10, 2013 was written by Huang Zhan, the notice was made against the fish feed processing plant involved in the case, and the notice was sent to the fish feed processing plant and signed by Huang Zhan, who was present at the time. Later, Lingmen Farm also posted notices requiring the fish feed processing plant to stop production on the exterior wall of the factory and at the door of the rubber factory, even though Wu Handong himself may not be able to see it, but the relevant staff in the factory can also see it and inform him. Therefore, Wu Handong should have known that the fish feed processing plant had been ordered by the relevant departments to stop production, and Wu Handong's argument that he did not know about the Lingshui Li Autonomous County Land Environment and Resources Bureau's order to stop production of his fish feed processing plant could not be established. Wu Handong's request for Lingmen Farm to compensate him for the loss of 2,145,700 yuan from the suspension of production has no factual and legal basis, and this court does not support it.

In summary, Lingmen Farm is not at fault for the invalidity of the contract, and the suspension of production of the fish feed processing plant is not caused by Lingmen Farm, in accordance with the provisions of Articles 52 and 58 of the Contract Law of the People's Republic of China and Article 64 of the Civil Procedure Law of the People's Republic of China, the judgment is as follows:

1. Reject and reject all the litigation claims of Wu Handong and Hainan Lingshui Yunda Breeding and Breeding.

2. The case acceptance fee is 23,9656 yuan is borne by Wu Handong and Hainan Lingshui Yunda planting and breeding.

1. On the issue of whether this case constitutes an apparent case.

Wu Handong and Hainan Lingshui Yunda Planting and Breeding believe that they have recruited several laid-off workers from the rubber factory and have been engaged in production and operation in the rubber factory for nearly 2 years, so it can be inferred that the farm is clear and acquiesced in the cooperation agreement signed by Wu Handong and Zeng Fanyun, so this case constitutes a superficial appearance. According to Article 49 of the Contract Law, in order to constitute an apparent **, the following three constituent elements must be met: 1. The actor must enter into a contract in the name of the person being **, and Zeng Fanyun and Wu Handong signed the cooperation agreement not in the name of Lingmen Farm, but in his own name. Therefore, the present case does not meet the first constitutive element. 2. The counterpart has reason to believe that the actor has the right to do so. According to Zeng Fanyun's statement, he had clearly informed Wu Handong at that time that the agreement must be approved by the farm before it can take effect. Therefore, the present case does not meet the second constitutive element. 3. The counterpart must be subjectively bona fide and without fault. That is, when the counterparty committed such an act, it was motivated by a legitimate motive and purpose, and it fulfilled a reasonable duty of care. However, judging from the facts of this case, Wu Handong did not invest in good faith, and was obviously subjectively at fault. It is mainly reflected in: First, Zeng Fanyun had informed him that the agreement must be submitted to Lingmen Farm for approval before it took effect, but he did not perform the proper approval procedures to Lingmen Farm. Second, the processing plant opened by Wu Handong is not formal and is the target of a severe crackdown. It can be seen that Wu Handong opened this processing plant obviously not out of good intentions. In summary, this case does not constitute a prima facie case at all.

2. On the issue of Wu Handong's request to terminate the cooperation agreement.

Lingmen Farm Rubber Factory has never signed a cooperation agreement with Wu Handong, and the person who signed the cooperation agreement with Wu Handong is Zeng Fanyun, not Lingmen Farm Rubber Factory. At that time, the Lingmen Farm Rubber Factory had long been closed, and Zeng Fanyun was no longer the director of the rubber factory, so it was impossible for Zeng Fanyun to sign the agreement on behalf of the Lingmen Rubber Factory, and his actions were purely without the right to dispose of them from a legal point of view. According to Article 51 of the Contract Law, a contract is valid only if the right holder recognizes it or obtains the right to dispose of it after the person who has no right to dispose of it. However, in this case, Lingmen Farm has never posthumously recognized Zeng Fanyun's conduct. In other words, the cooperation agreement is an invalid contract from beginning to end. According to the law, the termination of a contract shall be premised on the validity of the contract, and there is no question of termination of an invalid contract.

3. On the issue of whether Lingmen Farm should compensate Wu Handong for his losses.

First of all, this case does not meet the constitutive elements of apparent **, does not constitute apparent **, and the consequences should be borne by Wu Handong himself. Secondly, rubber factories and factories are all state-owned assets, and farms are responsible for management in accordance with the law. After Wu Handong's illegal business activities were **, the Land and Environment Resources Bureau of Lingshui Li Autonomous County ordered him to stop illegal production, but it did not have any effect. Under these circumstances, Lingmen Farm, as the property owner and manager of state-owned assets, was forced to block the gate of the rubber factory. Thirdly, Wu Handong opened a purely black processing factory, and there is no so-called legitimate rights and interests. In summary, Wu Handong's loss was not caused by Lingmen Farm, and Lingmen Farm should not compensate for his loss.

This case is a precedent in which a contract was signed with a person who has no right to **, and the parties did not recognize the invalidity of the contract afterwards. It is significantly different from the apparent **: the apparent ** requires that the act objectively form the appearance of having ** power, and it is enough to make people fully believe that the actor has ** power. If the other party fails to exercise reasonable care, the other party shall bear the consequences of invalidity as a result. Therefore, we warn all signatories that when signing a contract, we must carefully review the qualifications of the other party, whether they have complete signing ability and performance ability, and take precautions.

Relevant legal knowledge:

What are the precautions for signing a contract?

1. Verify and confirm the subject qualifications of the other party.

1) The other party to the contract is a natural person: verify and copy and keep his identity document (do not replace it with a business card) to confirm his true identity and capacity.

2) The counterparty to the contract is a legal person

Go to the local industrial and commercial department to inquire about its industrial and commercial registration information and inspect its company on the spot to determine its authenticity;

Verify whether the contractor is authorized by the company where he works, and check his power of attorney, letter of introduction, and contract;

The contract must be stamped with the official seal of the other party and the special seal of the contract.

3) The counterparty to the contract is "other organizations":

If the other party is an individual partnership or sole proprietorship, check whether the registration items of the business license are consistent with its introduction; It must be signed and stamped by the partners and the sole proprietorship manager.

Preparatory Office of Legal Persons: Confirm the identity of the person in charge and the identity of the shareholder, and affix the official seal of the Preparatory Office of the Legal Person and the shareholder.

4) In addition to stamping the official seal and private seal, the other party to the contract should sign in person.

2. Form of contract:

1) The contract must be signed in writing;

2) If the contract is concluded in the form of oral, letter or data message, a confirmation must be signed and stamped and signed;

3) The background of the contract should be indicated.

3. The necessary terms of the contract should be specific and clear

1) The names of the parties must be true and consistent;

2) The subject matter, quantity, quality, price, and packaging method of the contract should be specific and clear;

3) Pay attention to the acceptance method, procedure and time;

4) The mode of performance must be specific: delivery method, settlement method;

5) The performance period shall be determined at a point in time or a time period;

6) Try to make it clear that the location of the company is the place where the contract is performed;

7) The liability for breach of contract shall be quantified as liquidated damages or the calculation method for determining liquidated damages;

8) The dispute resolution method is negotiation and litigation, and it is agreed that the court where the company is located has jurisdiction or Guangzhou Arbitration Commission for arbitration.

4. Pre-contract contractual obligations:

1) Fulfill the obligation of assistance and notification;

2) The trade secrets of the other party obtained at the time of signing the contract shall not be disclosed or used.

5. The authorization documents such as power of attorney, letter of introduction, and sealed contract issued by the company should be tracked and managed, and the name of the other party of the contract, the scope of authorization, and the validity period should be indicated when the business is issued, and the business should be recovered in a timely manner.

The above-mentioned documents should be recovered in a timely manner when business personnel leave the company, and if they cannot be recovered, they shall promptly notify the relevant units in writing and make evidence preservation.

If it is found that the business personnel still sign the contract in the name of the company after the termination of the entrustment authorization, it shall be determined in a timely manner whether to recognize it; Where recognition is not granted, the other party should be notified in writing and evidence preservation should be conducted. If necessary, it is required to intervene and investigate its criminal responsibility.

6. In case of major misunderstanding, obvious unfairness, fraud, coercion, or taking advantage of the danger of others to conclude a contract, collect evidence for preservation in a timely manner, and exercise the right of revocation within the exclusion period (i.e., one year).

7. After the contract is signed, the original contract must be handed over to the company for safekeeping.

8. The content of the contract shall not harm the public interest, shall not maliciously collude to damage the interests of the state, the collective and the third party, and shall not contain exemption clauses that cause personal injury to the other party or cause property damage to the other party due to intentional and gross negligence.

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