An Analysis Of The Validity Determination Of The Company's Legal Representative's Unauthorized Guarantee

After the amendment to the Company law in 2005, the legal regulation of company's guarantee is collectively promulgated in Article 16, superseding the former article 60, recognizes, affirming the capability of guarantee. According to the new provision, the legal validity of company's guarantee under the common circumstances is recognized at legal level. Article 16 is apparently the core basis of effectively solving the legal problems of company's guarantee in practice. However, after the new law comes into effect, with the further development of commercial transaction practice, article 16 that fails to solve disputes, on the contrary, creates numerous new issues and problems in terms of company's guarantee, i.e., the frequent unauthorized guarantee and the typical issue of legal validity determination of company's legal representative's unauthorized guarantee, which is not only controversial in theory, but also creates different determination whereof in practice.The subject matter hereof is the issue of legal validity determination of company's legal representative's unauthorized guarantee. Considering that this issue has rather prominent practical feature, this paper selects a comparatively new case from the bulletin of China's supreme people's court, trying to understand this practical issue from a different perspective, so as to avoid the emptiness and indigestion hereof. In addition, this paper analyses several classic cases whereof, and has comments on the judgment whereof, so as to figure out some elements that shall attract attentions in the course of determination of the validity of company's legal representative's unauthorized guarantee.The introduction hereof mainly introduces the background and research methods hereof. Apart from introduction and conclusion, the main body hereof consists of four parts :The first part is case introduction. The quoted case involves a dispute of the legal validity of company's guarantee. The issues whereof,which is the topical subject hereof, are whether the defective guarantee made in the name of the company,without due legal process and without the approval of statutory department, by the company's legal representative, is effective, and whether company shall assume the guarantee liability whereof.The second part demonstrates the deliberation of few legal issues generated by that of the case hereof. The nature of company's representative's unauthorized guarantee belongs to a special type of company's guarantee. The determination whereof shall based on analysis of its particularity and the deliberation of the general issues of the validity of company's guarantee. All deliberation whereof is the necessity of determination, with logical reasonableness, of the validity of company's representative's unauthorized guarantee. Therefore, this section focuses on the following three aspect: the disputes of applicable law of determination of the validity of company's guarantee, the understanding of the legal nature of Article 16 of the amended Company Law, and the understanding of the examination liability obligation of creditor. This paper, after demonstrating its deliberation of the above questions, identifies its attitude towards those issues, solving the ground disputes for the following parts that analyses and reshapes judgment methods whereof.The third part is the analysis of the judgments of case involving company's representative's unauthorized guarantee. Based on the understanding of those classic cases and judgments, this section provides summarized critics of the attitude of the relevant judgments and brief analysis of the previous case, identifying the existing problems of current judgment of company's representative's unauthorized guarantee and how to reshape the ways and methods whereof.The fourth part identifies the existing defects of China's relevant legislation that reflected in the above cases, and offers improvement suggestions accordingly. The reflected defects mainly includes: the absence of particular provision of applicable law of company's guarantee, the absence of a systematic judgment rule whereof, although there are few relevant provisions scattering in multiple laws; secondly, Article 16 of the amended Company Law is too abstract, causing blurred understandings in judicial application; furthermore, the particular specified provision stipulating the creditor's examination obligation is absent. This paper proposes appropriate solution suggestions to solve those legislative defects.