If a branch of an enterprise as a legal person is authorized in writing by the legal person, it may provide guarantee within the scope of authorization.
If the creditor does not know that the guarantor is the functional department of the enterprise legal person, the losses caused thereby may be handled with reference to the provisions of paragraph 2 of Article 5 and Article 29 of the guarantee law.
Article 10 branches and functional departments of an enterprise as a legal person shall not be guarantors.
If the creditor knows or should know that the guarantor is the functional department of the enterprise legal person, the losses caused thereby shall be borne by the creditor itself.
Wu issued a debit note, in which the project management department involved was stamped with the official seal as the guarantor.
After verification, the official seal was forged by Wu, and the construction company was not informed.
The construction engineering company applied for retrial because it refused to accept the second instance judgment of the case.
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Article 18 in the interpretation of the Supreme People’s Court on Several Issues concerning the application of the guarantee law of the people’s Republic of China (repealed), if the functional department of an enterprise legal person provides a guarantee, the guarantee contract is invalid.
01 brief introduction of the case in the left square bracket a cultural square project in the left square bracket was undertaken by the construction engineering company.
If the creditor and the enterprise as a legal person are at fault, they shall bear corresponding civil liabilities according to their faults; If the creditor is not at fault, the enterprise legal person shall bear civil liability.
03 left square bracket lawyers’ analysis and comments left square bracket China’s laws and regulations have clear provisions on the subject qualification of the guarantor, and not any civil subject has the right to establish a guarantee.
02 the court in the left square bracket held that the retrial court in the left square bracket held that the functional department of the company had no right to conclude a guarantee contract.
After the guarantee contract is confirmed to be invalid, if the debtor, guarantor and creditor are at fault, they shall bear corresponding civil liabilities according to their faults.
Therefore, when the obligee requires the obligor to establish a security right for itself, in addition to grasping the basic information and processes such as signature and seal, it must also check and confirm the subject qualification of the guarantor in advance, so as to ensure the realization of its own rights and interests.
On November 30, 2013, the construction engineering company appointed Wu as the manager of the project management department.
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In addition to assuming the responsibilities within its functional scope, it has no other external functions and has no right to conclude guarantee contracts and assume guarantee liabilities.
Article 29 Where a branch of an enterprise as a legal person enters into a suretyship contract with a creditor without the written authorization of the legal person or beyond the scope of authorization, the contract is invalid or the part beyond the scope of authorization is invalid.
Article 10 of the guarantee law of the people’s Republic of China stipulates that branches and functional departments of enterprise legal persons shall not be guarantors.
If the guarantee contract provides otherwise, the agreement shall prevail.
The creditor does not know that the guarantor is the functional department of the enterprise legal person, so the losses caused can be handled with reference to the provisions of paragraph 2 of Article 5 and Article 29 of the guarantee law of the people’s Republic of China.
According to relevant laws and regulations, the project department in this case is only the functional department of the construction engineering company.
04 the relevant laws in the left square bracket stipulate that article 5 of the guarantee law of the people’s Republic of China (abolished after the implementation of the civil code on January 1, 2021) in the left square bracket is that the guarantee contract is a subordinate contract of the main contract, the main contract is invalid, and the guarantee contract is invalid.
The project department is a temporary organization established by the company and has not gone through industrial and commercial registration.
The project department in this case is a temporary institution established by the construction engineering company and has not gone through the industrial and commercial registration.
Later, because Wu failed to repay according to the contract, Xu sued him to the court and asked the construction engineering company to bear the guarantee liability.
Therefore, the guarantee of the project department for the loan in this case is invalid.
This is for reference only.
Article 18 of the interpretation of the Supreme People’s Court on Several Issues concerning the application of the guarantee law of the people’s Republic of China stipulates that if the functional department of the enterprise legal person provides a guarantee, the guarantee contract is invalid, and the creditor knows or should know that the guarantor is the functional department of the enterprise legal person, and the losses caused thereby shall be borne by the creditor itself.
According to relevant laws and regulations, the project department is only the functional department of the company.
In 2014, due to the lack of funds for the project involved, Wu borrowed 2.4 million yuan from Xu twice, and Xu paid 2.4 million yuan to Wu twice in the form of bank transfer.
In addition to assuming the responsibilities within its functional scope, the project Department has no other external functions and has no right to conclude a guarantee contract and assume the guarantee liability.
