An Empirical Study On The Effect Of Contracts In Violation Of Mandatory Provisions

The Invalidity of Contract is defined as: a contract- signed by relevant parties-seriously lacks effective elements, and it does not grant legal force when the contract is not in agreement with the consensus of relevant parties. Traditional theory of civil law holds that the invalidity of a contract will lead to the contract being null and void from the beginning. Based on Article 52(e) of “The People’s Republic of China Contract Law”(i.e. Contract Law) established in 1999, contracts in violation of the mandatory provisions of laws and administrative regulations are invalid. “The Judicial Interpretations of Issues Applicable to the Contract Law” promulgated by the Supreme People’s Court in 1999, determine that only laws and administrative regulations can define the validity of contracts. This excludes local laws and administrative regulations. According to Article 14 in the “The Judicial Interpretations of the Contract Law” established by the Supreme People’s Court in 2009, the regulations that influence the effectiveness of contracts are explained as “effective mandatory”, which aims at negating the validity of the contact and protecting national and social benefits.This paper focuses on the execution of Article 52(e) in the Contract Law. It conducted empirical research on validity of the contract which in violation of the mandatory provisions, aiming at discovering the real needs of society, and providing practical basis to the vicissitude of law. Based on the empirical research, in the judgement of illegal and ineffective contracts, the most common cases are as follows:housing sales contract, demolition compensation and resettlement agreement, sales contract, loan contract, etc. The most common illegal factors are object of contract(without qualification), contract conclusion procedure, and contract subject. And the articles that are commonly violated are the regulation of the restriction to the subject qualification and purpose, the procedures of the transfer of educational institutions,and the forest cutting scope in the Forest Law.In practice, judgement confusion mainly occurs in the following cases: 1. the co-owners have no right to dispose the contract; 2. the transfer of the non-ownership house; 3. the purchase of the homestead house by citizens orcompanies; 4. the contracts without qualified subject; 5. the contract signed by illegal subjects. The confusion of the judgement is specifically represented as follows: 1.mandatory provisions on the validity can be wrongly defined or be standardized inconsistently; 2. the judgement of using criminal law to abolish the civil law. This paper demonstrates that we should standardize the quotation of Laws, unify the methods of judgement, and exclude the interference of criminal investigation into the civil investigation, so that we can improve the efficiency of mandatory provisions on the validity.