On The Rescission About Share-transfer Contract

Compared with the general sales contracts, the rescission about share-transfer contract has particularities in conditions, legal validity and consequences. The main causes are the particularity of equity, equity transfer contract and the corporation law system. Equity is a kind of comprehensive right. On one hand, it is transferable because it contains property right, and that makes it can apply to the Contract Law on the general provisions of rescission of the contract. On the other hand, the content of non-property right decides that it must be combined with the Corporation Law regulations to deal with related issues. However, while dealing with the concrete dispute of the rescission of share-transfer contract, the judge who lacks of commercial trial thinking often confuses the equity transfer contract with general business contract and ignores the particularity of share-transfer contract, which leading to many problems can not be solved properly. We should try to respect the autonomy of the parties in the situation of equity transfer contract by appointment. But for the statutory dissolution, we should not only make it meet the conditions which regulated by the Contract Law, but also pay attention to the characters based on shareholders of the limited liability company. For example, a equity transfer contract should not be discharged easily without the agreement of other shareholders of the company. We should consider the stability of the trade and other specific details of a case when judging if a equity transfer contract which has made alteration registration should be discharged. The rescission of equity transfer contract should have retroactive effect because it is a kind of instant contracts. Moreover, it will break through the the relativity principle of contract and have effect on the company, other shareholders or other third party. The consequences of the rescission include the full restitution, and it means that the assignee in equity should return not only the equity but also the dividend income and the transferor should return the payment he gained and corresponding interest. On the occasion of discharge of contract by breach, the rescission doesn't influence the application of the liquidated damages and deposit clause. The breaching party shall compensate for the losses to the observant party. The assignee in equity should be liable for his infringement acts during the management in company according to the relevant provisions in the Corporation Law.