Circumstances in which the contract is invalid:
Article 52 of China's "Contract Law" stipulates: "A contract is invalid under any of the following circumstances: (1) One party concludes a contract by fraud or coercion, which harms the interests of the state; (2) Malicious collusion that harms the interests of the state, the collective or a third party; (3) Covering up illegal purposes in a legal form; (4) damaging the public interest; (5) Violating the mandatory provisions of laws and administrative regulations. " Specifically:
(1) Concluding a contract by fraud or coercion, which harms the interests of the state.
According to Article 68 of Opinions on Several Issues of General Principles of Civil Law, the so-called fraud means that one party intentionally informs the other party of false information, or intentionally conceals true information to induce the other party to make a wrong expression of intention. The contract concluded by fraud is based on the fraudster's misunderstanding of fraud.
The civil act of fraud is a civil act in which the perpetrator falls into some misunderstanding under the intentional fraud of the other party. To constitute the crime of fraud, the following conditions should be met: First, there must be fraud by the fraudster. Fraud is a kind of behavior that can make the deceived fall into a certain mistake, deepen the mistake or keep the mistake. There are three main manifestations, that is, fabricating false facts, concealing real facts and changing real facts. Second, there must be fraudulent intentions of fraudsters. Fraudulent intention refers to the intention to make others fall into a mistake because of the fraudulent behavior of the fraudster, and express their own meaning based on this mistake. Third, there must be mistakes made by the deceived because of fraud. The "mistakes" mentioned here refer to the defects in understanding the contents of the contract and other important situations. According to the traditional civil law, fraud must consist of the fact that the deceived person has fallen into a mistake. The deceived did not fall into a mistake. Although fraudsters have the intention and behavior of fraud, there is no legal consequence of fraud in civil law. Fourth, there must be a statement of will made by the deceived because of his mistake. The so-called fraudster's expression of will due to error means that there is a causal relationship between error and expression of will. The wrong understanding must be the direct motive of the expression of will in order to constitute fraud. Fifth, fraud violates the principle of good faith that should be followed in civil activities. The principle of good faith requires people to pay attention to credit in civil activities, keep their promises, be honest and not cheat, and pursue their own interests without harming the interests of others and society.
According to Article 69 of Opinions on Several Issues of General Principles of Civil Law, coercion refers to the act of forcing the other party to go against the true meaning by threatening to cause damage to the life and health, honor, reputation and property of citizens and their relatives and friends or to the honor, reputation and property of legal persons. Coercion is also one of the reasons that affect the validity of the contract.
Coercion should meet the following conditions: first, it must be a coercive act of coercing people. The so-called coercive behavior is the behavior that the coerced person expresses harm to the coerced person. Article 69 of Opinions on Several Issues of General Principles of Civil Law has clearly stipulated compulsory behavior. Second, there must be coercion to intimidate people. The so-called intentional coercion means that the coerced person has the intention to make the thinker (coerced person) feel terror and express some meaning because of terror. That is, it contains two meanings: it must have the meaning of making the coerced person fall into terror and it must have the meaning that the coerced person expresses a certain meaning because of terror. Third, coercion is illegal. There are three kinds of so-called illegality: the purpose is illegal and the means is illegal; The purpose is legal, but the means are illegal; The means are legal, but the purpose is illegal. Fourth, there must be people who are intimidated by coercion to produce terror, that is, people who are coerced realize that some interests of themselves or their relatives and friends will be greatly hurt, resulting in terror and fear. If the coerced person doesn't have terror because of coercion, although terror does occur, but its terror does not occur because of coercion, it doesn't constitute coercion. Fifth, the coerced person must express his will because of terror, that is, there is a causal relationship between terror and expression of will. This causal relationship only needs the coerced person to express his will subjectively based on terror. Only by meeting the above five requirements at the same time can it constitute coercion.
According to Article 52 of the Contract Law, a contract concluded by one party through fraud or coercion is invalid only if it harms the interests of the state.
(2) Malicious collusion that harms the interests of the state, the collective or a third party.
The so-called malicious collusion refers to the illegal behavior that the parties collude with each other to implement the contract for a certain purpose, causing damage to the interests of the state, the collective or the third party.
Contracts that maliciously collude to harm the interests of the state, the collective or the third party are common in judicial practice. For example, in order to avoid enforcement, the debtor entered into a false sales contract, a false mortgage contract or a false gift contract with the other party. It is also a typical malicious collusion that an agent colludes with a third party to conclude a contract, which harms the interests of the principal. This kind of contract harms the interests of the state, the collective or the third party, so it is also illegal and harmful to society. Therefore, the contract law invalidates the civil act of "maliciously colluding to harm the interests of the state, the collective or the third party" stipulated in Article 58, paragraph 1 (4) of the General Principles of Civil Law, and incorporates it into an invalid contract to safeguard the interests of the state and the collective.
The elements of malicious collusion in concluding a contract are as follows: First, the parties are subjectively malicious. That is, knowing or knowing that one's actions will harm the interests of the state, the collective or the third party, and deliberately doing it. Second, there is collusion between all parties. Collusion refers to mutual contact and communication, so that the parties can reach an agreement on motivation, purpose, behavior and behavior results and achieve the same goal. After the parties reach an agreement on the intention to achieve illegal purposes, they agree to cooperate with each other or jointly implement such contractual acts. Third, the two sides collude to harm the interests of the state, the collective or the third party. The result of malicious collusion should be that the interests of the state, the collective or the third party are harmed. The law does not prohibit the parties from obtaining benefits in the conclusion and performance of the contract. But if both sides seek their own interests at the expense of the state, the collective or the third party, the law will intervene.
A contract concluded by malicious collusion is absolutely invalid, and it cannot be handled according to the general principle of absolute invalidity stipulated in Article 58 of the Contract Law. Instead, according to Article 59 of the Contract Law, the property acquired by both parties as a result of the contract shall be nationalized or owned by the collective or individual.
(three) to cover up illegal purposes in a legal form
Covering up illegal purposes in a legal form, also known as concealment, refers to the fact that the parties cover up their real illegal purposes by carrying out legal acts, or the acts they carry out are legal in form but illegal in content.
When one party carries out the act of covering up the illegal purpose in a legal form, it is not illegal in the external performance of the act. However, this form is not the purpose that the parties want to achieve, nor the true intention of the parties, but through such a legal form, to cover up and achieve their true illegal purposes. Therefore, for this kind of hidden behavior, we should distinguish its external form from its true meaning, and accurately identify the effectiveness of the contract behavior implemented by the parties.
A contract concluded in a legal form to cover up illegal purposes should have the following elements: First, the real purpose or means to be achieved by the parties must be prohibited by laws or administrative regulations; Second, the parties to the contract have the intention to evade the law; Third, in order to evade the mandatory provisions of laws and administrative regulations, the parties take legal forms to cover up illegal purposes.
(4) harming the public interest.
If there is no clear stipulation in laws and administrative regulations, but the contract obviously harms the public interest, the clause of "harming the public interest" can be applied to confirm that the contract is invalid.
(5) Violating the mandatory provisions of laws and administrative regulations.
A contract that violates the mandatory provisions of laws and administrative regulations refers to a contract in which the parties violate the mandatory provisions of laws and administrative regulations in the purpose and content of concluding a contract. Article 4 of the Interpretation of Contract Law clearly stipulates: "After the implementation of the Contract Law, the people's court shall confirm that the contract is invalid, based on the laws formulated by the National People's Congress and its Standing Committee and the administrative regulations formulated by the State Council, not on local regulations and administrative rules."
It should be noted that it doesn't matter whether the parties are intentional or negligent in a compulsory contract that violates laws and administrative regulations. As long as the contract violates the mandatory provisions of laws and administrative regulations, it is confirmed that the contract is invalid. The author believes that according to the spirit stipulated in Article 52 of the Contract Law, the principle of confirming an invalid contract can be summarized as follows: if there are clear provisions in laws and administrative regulations, the contract is invalid; Otherwise, the contract is valid.
Legal consequences of invalid contracts:
(1) The contract is invalid and has retrospective effect.
Article 56 of China's Contract Law stipulates: "An invalid contract or a cancelled contract is not legally binding from the beginning. If part of the contract is invalid and does not affect the validity of other parts, the other parts are still valid. " It can be seen that after the contract is confirmed invalid or revoked, the result is that the contract is invalid from the beginning. This is the retroactivity of invalid contracts. This is true whether the contract is absolutely invalid or relatively invalid.
In judicial practice, when part of a contract is invalid and the contents of other parts that can exist independently still meet the valid requirements, the valid part will continue to be valid after the invalid part is confirmed, but the premise is that the valid part can exist independently and has nothing to do with the invalid part. If confirming that the contract is invalid will affect the validity of the valid part, the contract should still be invalid. For example, in the sales contract, when the two parties agree on the terms of deposit, if the proportion of the agreed deposit exceeds 20% of the total contract amount, the excess part is invalid, but not all deposit terms are invalid. This means that the contract is partially invalid. Another example is the contract concluded by the actor for reselling gold, silver, guns and ammunition. The content of the contract has fundamentally violated the legal provisions in nature, and the whole contract should be confirmed to be invalid.
(2) The invalidity of the contract shall not affect the validity of the dispute settlement clause.
Article 57 of the Contract Law stipulates: "The invalidity, cancellation or termination of a contract shall not affect the validity of the dispute settlement clauses confirmed in the contract." This clause shows that the dispute settlement clause in the contract is relatively independent and will not lose its effectiveness because the contract is invalid, revoked or terminated.
"Clauses on dispute settlement methods" mainly include the following forms: First, arbitration clauses. Arbitration clause is a form of arbitration agreement, and it is a clause that the parties agree to settle their disputes by arbitration in the contract. China adopts arbitration or trial system for contract disputes, and the arbitration clause has the effect of excluding litigation jurisdiction. The second is to choose the terms of the Court of Appeal. Article 25 of China's Civil Procedure Law stipulates that the parties to a contract may agree in a written contract to choose the jurisdiction of the people's court where the defendant's domicile, the place where the contract is performed, the place where the contract is signed, the plaintiff's domicile and the place where the subject matter is located, but they shall not violate the provisions of this law on hierarchical jurisdiction and exclusive jurisdiction. The third is to choose the terms of inspection and appraisal institutions. The fourth is the applicable provisions of the law. Fifth, the provisions on the settlement of disputes through consultation.
(3) the legal consequences of the invalidity of the contract
The Contract Law stipulates two legal consequences of invalid contracts. Article 58 stipulates: "After a contract is invalid or cancelled, the property acquired as a result of the contract shall be returned; If it is impossible or unnecessary to return it, it shall be compensated at a discount. The party at fault shall compensate the other party for the losses suffered as a result. If both parties are at fault, they should bear their respective responsibilities. " Article 59 stipulates: "If the parties collude maliciously and harm the interests of the state, the collective or the third party, the property thus obtained shall be owned by the state or returned to the collective or the third party."
1. Return the property. The return of property means that the parties to a contract have the right to claim the property that has been delivered to the other party after the contract is confirmed to be invalid or cancelled, and the other party has the obligation to return the accepted property. There are two forms of returning property:
First, unilateral return. Unilateral return means that one party has accepted the property from another party according to an invalid contract, and that party has returned the property to the other party; Or although both parties have accepted the property of the other party, but one party has not committed any illegal act, and the other party has intentionally committed illegal acts, the party without illegal acts has the right to request the return of the property, and the party with intentional illegal acts has no right to request the return of the property, and the property possessed by the other party is turned over to the state treasury according to law. Unilateral return is to return the property of one party to the other party. The original goods shall be returned, and the money originally delivered shall be returned. If the property was originally delivered, it should be returned.
Second, the return of both sides. Return by both parties means that when both parties have accepted the property paid by the other party, the property of both parties will be returned to the other party, and if the property is accepted, the property will be returned; If you accept the money, you will return it. If both parties intentionally violate the law, they should turn over all the property they get from each other to the state treasury.
2. Discount compensation. Discount compensation is a form of liability to compensate the other party in monetary form when the property of the other party obtained from an invalid contract cannot be returned or is unnecessary, and it is converted according to the value of the obtained property.
3. Compensation for losses: According to Article 58 of the Contract Law, if the other party suffers losses due to the fault of one party or both parties after the contract is confirmed to be invalid, it shall also be liable for damages. This kind of liability for damages should meet the following requirements: (1) the fact of damage exists; (2) The obligor for compensation is at fault. This is an important factor of damages. (3) There is a causal relationship between wrong behavior and loss.
If both parties to the contract are at fault, they shall bear corresponding responsibilities according to the provisions of Article 58, that is, the degree of fault shall apply. If the fault of one party is the main reason and the other party is the secondary reason, the former is more responsible than the latter; If one party is intentional and the other party is negligent, the responsibility of the intentional party should be greater than that of the negligent party.
If one party suffers losses due to the invalidity or cancellation of the contract and the other party is at fault, it shall compensate the victims for their losses. This kind of liability for compensation is based on the liability for fault in contracting. The "loss" here should be limited to the actual loss that has occurred, and should not compensate the expected benefits, because the treatment of invalid contracts is based on the principle of restitution.
4. Non-civil consequences After a contract is confirmed to be invalid or revoked, in addition to civil legal consequences such as returning property and compensating for losses, non-civil consequences will also occur under special circumstances. Article 59 of the Contract Law specifically stipulates that if the parties to a contract maliciously collude to harm the interests of the state, the collective or the third party, the legal consequences of recovering the property will occur, that is, the property obtained by the parties maliciously collude to harm the interests of the state, the collective or the third party will be recovered, returned to the state or returned to the lost collective or the third party. Nationalization is not a civil remedy, but a public remedy; Generally known as the legal consequences of non-civil law. According to the interpretation of Article 6 1 Paragraph 2 of the General Principles of Civil Law in Opinions on Several Issues, the recovered property includes the property already acquired by both parties and the property acquired by agreement, which reflects the punishment of the perpetrator for intentionally violating the prohibited norms of the law.