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1、Validity of ContractCategories of EffectivenessCategories of EffectivenessIllegalityIllegalityMental ReservationMental ReservationMalicious CollusionMalicious CollusionEffectiveness of Contract(juristic act)Category of effectContract FormedvalidvalidavoidableavoidableUncertain(indefinite)Uncertain(i
2、ndefinite)voidvoidContract Not formed:invalidValidIndefiniteAvoidableVoidContract not formedContract FormedEnd of the period for the right to avoidRevokeRetroactive effect of being void validvoidvalidvalidvoidvoidRefuse to acknowledgeacknowledgeRetroactive effect of being valid validNo contract at a
3、ll(invalid or void)validvoidvoidIndefiniteAvoidableEffective elements of Juristic ActGeneral effective elementGeneral effective elementThe party shall have capacity to make a juristic The party shall have capacity to make a juristic actactRCC 75-85RCC 75-85、981981 Subject matter shall be legal and s
4、hall not violate Subject matter shall be legal and shall not violate mandatory laws(71),public policy(72),and justice mandatory laws(71),public policy(72),and justice(74)(74)Declaration of intention shall be complete and no Declaration of intention shall be complete and no any defect(86-93)any defec
5、t(86-93)Special effective elementSpecial effective elementRegistration(758)Registration(758)Subject Matter of Contract1.The subject matter shall be legal.ubject matter shall be legal.A.Shall not violated the mandatory laws(71)Shall not violated the mandatory laws(71)2.The subject matter shall be pro
6、perubject matter shall be propera.a.Shall not violate public policy and good moral Shall not violate public policy and good moral(72)(72)b.b.Shall not be unconscionable(74,274-1)Shall not be unconscionable(74,274-1)3.The subject matter shall be possible(246,ubject matter shall be possible(246,247)24
7、7)4.The subject matter shall be certain.ubject matter shall be certain.Juristic act and the state lawAutonomous in private life:an individual can create or Autonomous in private life:an individual can create or form a private legal relationship under his/her form a private legal relationship under h
8、is/her willingness.willingness.Juristic act under private autonomy:Juristic act under private autonomy:Making decision by his/her self and taking responsibility by Making decision by his/her self and taking responsibility by his/her own.his/her own.The state protects and preserves the accomplishment
9、 of private The state protects and preserves the accomplishment of private autonomy.autonomy.The parties can exclude laws if the law exists as a instrument of The parties can exclude laws if the law exists as a instrument of supplement or interpretation to private intention.supplement or interpretat
10、ion to private intention.In order to maintain social order,ethics,and justice,the state In order to maintain social order,ethics,and justice,the state may intrude private relationship by setting out a mandatory laws.may intrude private relationship by setting out a mandatory laws.The category of law
11、s by its functionDiscretionary ruleDiscretionary rule Supplemental rule Supplemental rule 320320、346346、369369 Interpretation ruleInterpretation rule4 4、370370Mandatory ruleMandatory rule Imperative ruleImperative rule27I27I、4747、760760、972972、10491049 Prohibitive rule Prohibitive rule 1616、1717、222
12、222、757757Article7ofPRCContractLawInconcludingorperformingacontract,thepartiesshallcomplywithlawsandadministrativeregulationsandobservesocialmorals,andshallnotdisturbthesocialandeconomicorderorharmthepublicinterests.Article6and70fPRCGPCLArticle6Civil activities shall be in compliance with Civil acti
13、vities shall be in compliance with the the lawslaws;where there are no relevant provisions;where there are no relevant provisions in the law,they shall be in compliance with in the law,they shall be in compliance with state policiesstate policies.Article7civil activities shall observe the social eth
14、ics civil activities shall observe the social ethics and shall not harm the public interest and and shall not harm the public interest and undermine the state economic plans or undermine the state economic plans or disturb the social economic order.disturb the social economic order.Article52ofPRCCon
15、tractLawAcontractisAcontractisvoidvoidinanyofthefollowinginanyofthefollowingcircumstances:circumstances:(i)Onepartyinducedconclusionofthecontractthrough(i)Onepartyinducedconclusionofthecontractthroughfraudorduress,therebyharmingtheinterestsofthestate;fraudorduress,therebyharmingtheinterestsofthestat
16、e;(ii)(ii)Thepartiescolludedinbadfaith,therebyharmingtheThepartiescolludedinbadfaith,therebyharmingtheinterestsofthestate,thecollectiveoranythirdparty;interestsofthestate,thecollectiveoranythirdparty;(iii)Thepartiesintendedtoconcealanillegalpurposeunder(iii)Thepartiesintendedtoconcealanillegalpurpos
17、eundertheguiseofalegitimatetransaction;theguiseofalegitimatetransaction;(iv)Thecontractharmspublicinterests;(iv)Thecontractharmspublicinterests;(v)Thecontractviolatesamandatoryprovisionofanylaw(v)Thecontractviolatesamandatoryprovisionofanylaworadministrativeregulation.oradministrativeregulation.ROC
18、Civil CodeArticle71Article71A juridical act which violates an imperative or prohibitive provision of the act is void A juridical act which violates an imperative or prohibitive provision of the act is void except voidance is not implied in the provision.except voidance is not implied in the provisio
19、n.Article72Article72A juridical act which is against public policy or morals is void.A juridical act which is against public policy or morals is void.Article73Article73A juridical act which does not follow the formality required by the act is void unless A juridical act which does not follow the for
20、mality required by the act is void unless otherwise provided by the act.otherwise provided by the act.Article74Article74If a juridical act whereby a person profiting by the difficulties,recklessness or If a juridical act whereby a person profiting by the difficulties,recklessness or inexperience of
21、another causes to be delivered or promised pecuniary payment to inexperience of another causes to be delivered or promised pecuniary payment to such an extent that under that circumstances,the transaction is obviously unfair,the such an extent that under that circumstances,the transaction is obvious
22、ly unfair,the court may revoke the juridical act or reduce the payment upon the application of any court may revoke the juridical act or reduce the payment upon the application of any interested person.interested person.The application mentioned in the preceding paragraph must be made within one yea
23、r The application mentioned in the preceding paragraph must be made within one year from the date of the juridical act.from the date of the juridical act.The Effect of Illegal ContractPrinciple rule:VoidVoid in part or totallyVoid in part or totallyObligatory act void or dispositive act voidObligato
24、ry act void or dispositive act voidException rule::A juridical act which violates an imperative or A juridical act which violates an imperative or prohibitive provision of the act is void except prohibitive provision of the act is void except voidance is not implied in the provision.voidance is not
25、implied in the provision.Contract shall not violate the public policy and good Contract shall not violate the public policy and good moralmoral The rule:The rule::ROC Civil Code 72ROC Civil Code 72 Function and legislative reasonsFunction and legislative reasonsThe juristic act violated public polic
26、y or good moral The juristic act violated public policy or good moral will vitiate the national moral and e6thics:therefore will vitiate the national moral and e6thics:therefore it shall be void.(the gist of the legislative reason)it shall be void.(the gist of the legislative reason)Judge may supple
27、ment the law on account of the Judge may supplement the law on account of the need of society and economy so that the law can need of society and economy so that the law can progress with the development of society.progress with the development of society.Setting up a institute to unify and organize
28、 the Setting up a institute to unify and organize the legal norms so as to keep the laws in the same legal norms so as to keep the laws in the same standards.standards.Blanket stipulation:the judge shall specify the Blanket stipulation:the judge shall specify the extent of the rule based on specific
29、 case.extent of the rule based on specific case.Standard of judgment:the facts on a specific Standard of judgment:the facts on a specific case(the motive or purpose of the juristic case(the motive or purpose of the juristic act),legal norms,social value,customary,act),legal norms,social value,custom
30、ary,justice.justice.Japan Civil CodeArticle 90A juristic act whose object is contrary to the A juristic act whose object is contrary to the public order or good morals is null and void.public order or good morals is null and void.Article 91If the parties to a juristic act have declared an If the par
31、ties to a juristic act have declared an intentions which deviates from any provision intentions which deviates from any provision of a law or ordinance not concerned with the of a law or ordinance not concerned with the public order,such intention shall prevail.public order,such intention shall prev
32、ail.Meaning of public policy and good moralPublic policyPublic policy Defined as the common interest of a nation or society.Defined as the common interest of a nation or society.“Public”is a uncertain legal concept.It doesnt“Public”is a uncertain legal concept.It doesnt mean a will that comes from m
33、ost people over half mean a will that comes from most people over half but a group concept represented or recognized by a but a group concept represented or recognized by a nation or society.nation or society.“public policy”is a concept of legal norm which“public policy”is a concept of legal norm wh
34、ich includes constitution and laws.includes constitution and laws.Good MoralGood Moral Defined as a concept of common ethics in a society.Defined as a concept of common ethics in a society.“good”is a uncertain legal concept and is used as a“good”is a uncertain legal concept and is used as a standard
35、 for screen customary law.standard for screen customary law.Mr.X and Miss Y loved each other and cohabitated without marriage.Two years ago,X promised to give away his land to Y as a gift and soon after the gift he transferred its ownership to Y.However,X and Y agreed if cohabitation is terminated,t
36、hen the land shall be returned to X.Now Y refused to live with X and X claimed to transfer ownership of the land to him.Dose his claim has legal basis?Gift concludedGift concludedGift effectedGift effectedGift concluded Gift concluded and effectedand effectedGift became Gift became extinctextinctCoh
37、abitation startedCohabitation started(condition precedent)(condition precedent)Cohabitation Cohabitation dismisseddismissedCohabitationCohabitationstartedstartedCohabitation Cohabitation DismissedDismissed(condition subsequent)(condition subsequent)Defects of Declaration of Intention1.1.Declaration
38、inconsistent with intentionDeclaration inconsistent with intention1.1.Intentional inconsistency(variance)Intentional inconsistency(variance)1)1)Unilateral inconsistency:mental reservationUnilateral inconsistency:mental reservation2)2)Bilateral inconsistency:A false declaration of intention made in c
39、ollusion Bilateral inconsistency:A false declaration of intention made in collusion or malicious collusionor malicious collusiona.a.Contingent inconsistencyContingent inconsistency1)1)MistakeMistake1)1)Mistake in Contents of Declaration Mistake in Contents of Declaration 1)1)Mistake of identity in p
40、ersonMistake of identity in person2)2)Mistake of identity in subject matter Mistake of identity in subject matter 3)3)Mistake of identity in effect of juristic actMistake of identity in effect of juristic act2)2)Mistake in ExpressionMistake in Expression3)3)Mistake in MotiveMistake in Motive1)1)Mist
41、ake in qualification of personMistake in qualification of person2)2)Mistake in quality of propertyMistake in quality of property2.2.Manifesting the intent without freedomManifesting the intent without freedoma)a)FraudFraudb)b)DuressDuressMental ReservationPurpose to made a Purpose to made a mental r
42、eservation Malicious motive,circumvent debt,faking a false Malicious motive,circumvent debt,faking a false contract,fictitious investment,provisional contract,fictitious investment,provisional decision.decision.Constituent elementsConstituent elements There is a declaration of intentionThere is a de
43、claration of intentionThe manifestation of declarant shall be The manifestation of declarant shall be variant with its intentionvariant with its intentionThe declaration shall not be a collusion The declaration shall not be a collusion between declarant and the other partybetween declarant and the o
44、ther partyAwareness v.CollusionAwareness v.CollusionROC Civil CodeArticle 86An expression of intent shall not be void for the expresser did not intend to be bound by it,except the fact was known to the other party.Japan Civil CodeArticle 93A declaration of intention shall not be A declaration of int
45、ention shall not be invalidated by the fact that the declarant made invalidated by the fact that the declarant made it knowing such declaration not to be his true it knowing such declaration not to be his true intention;however,such declaration of intention;however,such declaration of intention shal
46、l be null and void if the other intention shall be null and void if the other party was aware,or should have been aware,party was aware,or should have been aware,of the true intention of the declarant.of the true intention of the declarant.The effect of a false declaration of intention made in collu
47、sion Between the partiesBetween the parties The juristic act under malicious collusion is voidThe juristic act under malicious collusion is void The hidden juristic act is validThe hidden juristic act is validRelation with the third partyRelation with the third party The voidance can not be a The vo
48、idance can not be a valid defensevalid defense against any bona fide against any bona fide third party.third party.Bona fide:without knowledge about the collusion and Bona fide:without knowledge about the collusion and without knowledge not caused by its fault.without knowledge not caused by its fau
49、lt.The third party:anyone other than the parties who made the The third party:anyone other than the parties who made the collusion and their heirscollusion and their heirsValid defense against any bona fide third party:if the bona Valid defense against any bona fide third party:if the bona fide thir
50、d party raises a valid defense,then the fictitious fide third party raises a valid defense,then the fictitious contract is valid.The parties made fictitious contract cannot contract is valid.The parties made fictitious contract cannot use the voidance effect against the third party.use the voidance