Studies About The Legal Issues Of Contract Signed Due To A Third Person's Fraud And Coercion

A contract signed due to any third person's fraud and coercion has experienced a historical process from no explicitly legal stipulation to clearly legal provisions on it in China.Prior to the adoption of the General Principles of Civil Law,the scholars from the domestic theoretical circles have launched the thorough studies on the effectiveness of the contract signed due to any third person's fraud and coercion by drawing lessons from the provisions of extraterritorial legislation.There are mainly two points of view among the scholars.The one is to advocate the use of ‘distinction model',that is,distinguishing the conditions of fraud and coercion as well as the application of different relief standards,the other to advocate the adoption of ‘unified model',i.e.,not distinguishing the conditions of fraud and coercion as well as the application of consolidated relief standards.Since there were no definite provisions on the effectiveness of contract signed due to a third person's fraud and coercion at that time,a lot of difficulties have occurred in dealing with and solving the disputes about the effectiveness of such contracts in the judicial practices till the General Principles of Civil Law of the People's Republic of China was passed on March 15,2017,which has provided the basis to solve the effectiveness of the contract signed due to a third person's fraud and coercion.The ‘distinction model' has been adopted in the General Principles of Civil Law,mainly thinking about the social hazards of such two behaviors based on the fraud and coercion of the third person.Many countries outside the country have also adopted the ‘distinction model' on a basis of different social hazards of those two behaviors.According to the spirit stipulated in the General Principles of Civil Law,as for the perfection of the legal relief system for the contract signed due to a third person's fraud and coercion,it may start with two following aspects: on the one hand,define the legal connotation of the third person's fraud and coercion.The conditions for a third person are quite complicated and need eliminating through comprehensive analysis,defining that the legal representative of the counterpart in a contract,legal agent,entrusted agent or the person who participates in such behavior as its auxiliary aider or the shareholder of a limited company does not fall into the third persons,that the subsidiary of the contracting parties,their branch company or internal organization is excluded from the third persons,that any persons who have formed closely economic cooperative relationship and / or benefit distribution relationship with any of the contracting parties are beyond the third persons and that any persons who have malicious collusion with any of the contracting parties will not belong to the third persons.As for the legal connotation of fraud and coercion,it is stipulated in Article 68 and Article 69 of Several Opinions of the Supreme People's Court on the Implementation of the General Principles of the Civil Law of the People's Republic of China(for Trial)that,as for the keycomponents of a third person's fraud and coercion,refer to the determination of key components for a third person's fraud and coercion in the theories of Civil Law in our country,specifically including the deliberate fraud and coercion of the third person,the implementation of fraud and coercive acts,the injured party considering it as the intention representation based on misunderstanding or fear as well as the cause-and-effect relationship existing between the intention representation of the injured party and misunderstanding or coercive act.On the other hand,the specific resolution system for the contract signed due to a third person's fraud and coercion shall be improved.In the aspect of perfecting the system of revocation rights,the injured party is endowed with the rights such as cancelling the contract prior to actual implementation of such contract,cancelling the contract through negotiations of contracting parties and bona fide counterpart cancelling the contract.With regard to improvement of onus probrandi system,it is stipulated that the counterpart in a contract shall have the onus probrandi liabilities for whether to have been informed,for the facts of disagreeing with such cancellation and the maintenance of contractual effectiveness;that the injured party who cannot obtain the proofs in person may apply to the People's Court or the Arbitration Institution for such proofs,that the injured party may sue to the public security organ and put it on record for proofs as a criminal case when such fraudulent and coercive acts may be possibly involved any criminal evaluations.In terms of improving responsibility distribution of the contracting parties,it is stipulated that the injured party and the contracting counterpart shall be liable for compensation for damages to each other according to their faults.In the aspect of establishing the third person infringement liability system,it is stipulated that the injured party may request the third person to assume the infringement liability only when the contracting counterpart is in good faith and,they may ask for the third person to bear the infringement liability when the injured party and the contracting counterpart have no faults.