Approval of effective contracts: Interpretation of the Supreme People s Court s judicial interpretat

Mondo Social Updated on 2024-02-01

Article 12[Contracts that require approval to take effect].After the contract is established in accordance with law, if the party with the obligation to report for approval does not perform the obligation to report for approval or the performance of the obligation to report for approval does not conform to the provisions of the contract or the provisions of laws or administrative regulations, and the other party requests that it continue to perform the obligation to report for approval, the people's court shall support it;Where the other party claims to terminate the contract and requests that it bear the liability for compensation for violating the obligation to report for approval, the people's court shall support it.

Where the people's court makes a judgment that one of the parties still fails to perform after it has performed its obligation to report for approval, and the other party claims to terminate the contract and requests that it bear the liability for compensation with reference to the liability for breach of contract for breach of contract, the people's court shall support it.

Where, before the contract is approved, one party sues to request the other party to perform the main obligations agreed in the contract, and refuses to modify the litigation claim after interpretation, the people's court shall make a judgment to reject the litigation claim, but this does not affect the fact that it initiates a separate lawsuit.

Where a party with an obligation to report for approval has already gone through formalities such as applying for approval or has already performed the obligation to report for approval as determined by the effective judgment, and the approving organ decides not to approve it, and the other party requests that it bear liability for compensation, the people's court will not support it. However, if the contract is not approved due to reasons attributable to the parties such as delay in performance of the obligation to report for approval, and the other party requests compensation for the losses suffered thereby, the people's court shall handle it in accordance with the provisions of Article 157 of the Civil Code.

Interpretation: Article 1 of the Civil CodeThe main provisions of this article mainly stipulate that for a contract that has taken effect since the approval formalities have been completed, if the contract has not taken effect due to the failure to go through the approval formalities, it shall not affect the independent effectiveness of the clause in the contract on the performance of the obligation to submit for approval.

The clause of "fulfilling the obligation to submit for approval" agreed in the contract is an independent and effective clause. If the party with the obligation to report for approval fails to perform or the performance of the obligation does not comply with the provisions, the counterparty has the right to request it to continue to perform the obligation to report for approval in accordance with the contract, or to request the termination of the contract and require the other party to bear the liability for compensation for the breach of the obligation to report for approval. It should be noted that at this time, the contract has not yet taken effect because the contract has not fulfilled the obligation to report for approval, so the liability for breach of contract cannot be claimed.

If the court makes a judgment to perform the obligation to report for approval but fails to perform, it shall be deemed that the other party enjoys the benefits brought about by the entry into force of the contract, which is reflected in the legal result, that is, the other party can claim to terminate the contract and require the other party to bear the liability for breach of contract with reference to the effective date of the contract.

Before the contract is approved, the contract has been established but has not taken effect, so it is impossible to request the other party to perform the main obligations of the contract, and its litigation claim can only be "requiring the other party to perform the obligation of reporting for approval".

The party with the obligation to report for approval shall not be liable as long as it has fulfilled its obligations as agreed in the contract (i.e., the obligation to submit for approval), and whether or not to perform the obligation to report for approval and whether the contract is approved does not have a necessary causal relationship. If the other party suffers losses due to the failure to undertake the obligation to report for approval as agreed, it must bear the corresponding responsibility.

Article 13[Validity of the contract for filing, approval or registration].Where a contract is invalid or voidable, and the parties claim that the contract is valid on the grounds that the contract has been filed with the relevant administrative department, has been approved by the approving authority, or has been registered for the alteration or transfer of property rights in accordance with the contract, the people's court will not support it.

Interpretation: The determination of the validity of a contract does not change depending on whether the contract has been filed, approved by the approving authority, or the registration of changes in property rights in accordance with the contract.

[Contracts that require approval to take effect].

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