Study On The Case Of Company Establishment About Mr.Zhao V. Mr.Yin

The establishment of company is the important prerequisite for a legally established company to obtain the status of a legal person,and it is a stage that a company has to go through inevitably.Mr Zhao versus Mr Yin focuses on sponsors'dispute over rights and interests,which resulted from the failure in establishing the company because of the company sponsors' fulfilling their obligations inactively.The core controversies of this case mainly concentrate upon the following three aspects:determination of the nature of the sponsors' establishing the company,the validity of the company promotion protocol,and the nature and validity of Mr.Zhao ' s transferring the mining license to the establishing company.The sponsors' association shall be deemed as a unified entity whose basic function is to establish a company effectively based on the deeds,and it shall be regarded as the act of agency in the name of the company before the establishment of the company while the temporary entity shall be regarded as an agency.When the company is established effectively,the entity should be seen as the agent of the company in the future and subject to proxy rules.When the establishment fails,these sponsors' association should be deemed as a unified entity and subject to the rules of partnership.Debts should be liquidated in time on the basis of debt clearance rules attached to the failure in the establishment of the company,and relevant subjects ' responsibilities should be defined.Since the failure of the establishment of the company does not produce any legal effect in the Company Law,these sponsors ' civil responsibility should be confirmed based on the contract.If any debt is produced during the establishment of the company,company sponsors shall undertake joint liability according to the rules of partnership and the erring party shall compensate the other party for the losses it suffered as a result of the act.In this case,both parties are responsible for the failure in establishing the company,so it is unable to determine which party has breached the contract.As a result,there is no need for Mr Yin to assume the compensation for Mr Zhao' s loss in fixed assets on the investment and the payment of breach of contract damages.As for the agreement on company establishment,we should fully respect both parties 'intentions and treat the validity of the agreement cautiously.In terms of the purpose of the agreement and the characters based on shareholders,the agreement should be cancelled because the agreement has come into force and there is no necessity and possibility to continue the performance of contract.As for the nature and validity of Mr Zhao's transferring the mining license to the pre-incorporation,actually we should admit the independent civil subject status of the pre-incorporation in the process of establishing the company and give a comprehensive identification to the behavioral nature of the company sponsors and the pre-incorporation in specific legal relationships.Transfer Agreement of the Mining License in this case should be identified as a formal contract with entry-into-force conditions,which actually refers to the act that Mr Zhao transferred the mining license to the pre-incorporation,and it should be confirmed according to relevant laws and regulations.Since the agreement is unable to be implemented when the establishment fails,the court shall cancel the agreement upon any one party ' s application.Mr Yin needn' t undertake payment because the act of mining license transfer is nullified for the lack of the approval of the competent department of geology.