Case Concerning Procuratorial Protest over Civil Lending Dispute of X Rural Commercial Bank Co., Ltd. vs. Zhang X Ze, Cao X Huan, and Xing X Mei
(SPP Guiding Case No. 223)
Key words
Supervision of final civil judgments; Private lending guarantees; Affixation of the official seal; Ultra vires representation; Reasonable examination duty of the counterparty; Liability for culpa in contrahendo
Summary
In determining the legal nature of a legal representative affixing a legal person's official seal on a promissory note, the analysis shall consider the specific circumstances of the seal's affixation, including its position, the nature and purpose of the contract, and other relevant factors, in order to ascertain the parties' true intent. If the counterparty fails to exercise reasonable diligence to verify whether the legal representative had authority to provide a guarantee on behalf of the company, the counterparty cannot be deemed a bona fide party, and the guarantee shall be considered null and void. If the legal person bears fault for the invalid guarantee, it shall assume liability for culpa in contrahendo in accordance with the law.
Relevant Provisions
Article 7 of the Judicial Interpretation of the Supreme People's Court on Some Issues Regarding the Application of the Guarantee Law of the People's Republic of China (now Article 17 of the Interpretation by the Supreme People's Court on the Application of the Relevant Guarantee Regimes of the Civil Code of the People's Republic of China)
Articles 207, 215, and 216 of the Civil Procedural Law of the People's Republic of China (Rev. 2021, now Articles 211, 219, 220 in the Rev. 2023)
Articles 78 and 90 of the Rules on the Supervision of Civil Proceedings by People's Procuratorates
