In January 2011 Department Store entered into a sales contract with Appliance Co to buy 100 refrigerators from the latter at a price of RMB 3,000 yuan/piece, total price being RMB 300,000 yuan. The payment would be made in two instalments: 100,000 yu

 Stationary Company was a joint stock company incorporated by four natural persons (A, B, C and D) and Fengli Co Ltd, with a total registered capital of RMB 50 million yuan. During the operations of the past three years, Stationary Company gained no profits in the financial years 2008 and 2009. In 2010 Stationary Company gained an after-tax profit of RMB 5 million yuan.

In the beginning of 2011 the board of directors of Stationary Company submitted to the general shareholders’ meeting for approval two resolutions. The proposed resolutions were on the following:

(i) The company would distribute dividends to the shareholders on the basis of 0·10 yuan per share with all its after-tax profit of RMB 5 million yuan for 2010;

(ii) For the purpose of getting financing from the bank, the company was to place a pledge with all the shares of its shareholders to the bank.

Required:

Answer the following questions in accordance with the relevant provisions of the Company Law, and give your reasons for your answer:

(a) state whether proposed resolution (i) on the distribution of dividends was in conformity with the law;

(b) state whether proposed resolution (ii) on placing the shares as a pledge for a loan was in conformity with the law.

In relation to the basic legal system of China:

(a) explain the rule of exclusive jurisdiction by the people’s court in dealing with civil or commercial cases;

(b) state the disputes that shall be subject to exclusive jurisdiction, including the relevant courts that shall have jurisdiction;

(c) state the relationship between the exclusive jurisdiction and the territorial jurisdiction in dealing with civil or commercial cases.

In relation to the Contract Law of China:

(a) state which provisions concerning exemptions contained in a contract shall be deemed as invalid;

(b) state the rules that deal with the consequences where a contract is decided to be invalid.

In relation to corporate behaviour and legal liabilities:

(a) explain the term controlling shareholder under the Company Law of China;

(b) explain how the creditors may take legal action against the shareholder of a company for abusing the independent legal entity, and the doctrine of law for such legal action;

(c) explain the civil liabilities of the controlling shareholder for the damage of the company through affiliate trading.

Yado Steel Co Ltd (Yado Steel) entered into a loan agreement with Industry Bank to borrow RMB 20 million yuan for its expansion programme. Yado Steel provided its office building as property mortgaged for the debt, and made the registration as required. Mr Ding, one of the shareholders of Yado Steel, placed a guarantee letter of general liability in favour of Industry Bank.

Due to poor performance, Yado Steel failed to repay the debt when it came to maturity. Meanwhile, Industry Bank, under a restructuring plan, transferred the credit of RMB 20 million yuan together with the right of pledge to Oriental Assets Management Co (OAM). It also made a written notice to Yado Steel and Mr Ding, but failed to transfer the right of mortgage to OAM. On the contrary, Industry Bank concluded an agreement with Yado Steel before it went bankrupt, and settled other debts owed by the latter through the sale of the office building as mortgaged for the loan. Having found this fact, OAM, as a transferee of the credit, requested the court to order Mr Ding to bear its guarantor’s liability for the debt. Mr Ding asserted that he was a pledger with a general liability and would be responsible for the debt only if the things mortgaged could not satisfy the debt.

Required:

Answer the following questions in accordance with the relevant provisions of the Property Law and the Contract Law, and give your reasons for your answer:

(a) State whether the defence of Mr Ding should be supported by the court.

(b) State what was the cause of this dispute between OAM and Industry Bank.

Due to the failure to settle the debts due, Jianshe Garment Trading Co Ltd (Jianshe Co) was declared bankrupt by its creditors. In October 2010 the court rendered an order to accept the application of bankruptcy and designated a bankruptcy administrator. During the process of bankruptcy liquidation the bankruptcy administrator found that Jianshe Co had given up a credit of RMB 200,000 yuan owed by its affiliate enterprise in August 2009.

The bankruptcy administrator also found that some shareholders of Jianshe Co failed to made full capital contributions as prescribed in the agreement of incorporation.

Required:

Answer the following questions in accordance with the Enterprise Bankruptcy Law of China, and give your reasons for your answer:

(a) (i) State whether the action of giving up credit can be revoked during the process of liquidation;

(ii) State whether the court should grant an order to revoke the act of giving up credit.

(b) State how to deal with the matter of the lack of full capital contributions by some of the shareholders of Jianshe Co.

In relation to the Property Law of China:

(a) explain the term ‘right to use the land for construction’;

(b) state the forms to establish the right to use the land for construction;

(c) state the various forms of disposal in relation to the right to use the land for construction by the owner of such a right.

下列行为中应纳营业税的是()。

A.桥梁大修

B.空调厂家为用户安装空调

C.邮电部门附设独立核算门市部销售报刊

D.自建自用建筑物

In January 2011 Mr Fang, the owner of a private enterprise, entered into a loan agreement and a mortgage agreement with a local credit association (Credit Association) to borrow RMB 2 million yuan for one year to meet the needs of his business operation, and provided his own house as the subject matter under the mortgage agreement. After the conclusion of the mortgage agreement, Mr Fang and Credit Association went to register the mortgage agreement with the local real estate registration centre.

In June 2011 Mr Fang leased the same house to Ms Lee for a period of two years.

Due to the sudden change of the market and poor operation of his enterprise, Mr Fang was unable to repay the principal and interest as agreed when the loan matured at the end of January 2012. Credit Association filed a lawsuit in the people’s court and obtained a judgement in favour of its claim for the principal RMB 2 million yuan plus interest.

Credit Association then advised Ms Lee to leave the house, as it has been authorised by the people’s court to organise a public auction to sell the house for the enforcement of the judgement. Ms Lee refused to leave the house on the grounds that the lease agreement was an effective one between Mr Fang and herself and would last until the end of June 2013. In addition, Credit Association’s right of mortgagee should not affect her right under the lease agreement.

Required:

Answer the following questions in accordance with the relevant provisions of the Property Law, and give your reasons for your answer:

(a) state whether Ms Lee’s grounds for refusal to leave the house can be established.

(b) state how Ms Lee should deal with the current situation.

Buyer and Seller entered into a sales contract to buy 10,000 kg chemical products at a price of RMB 200 yuan/kg, totalling RMB 2 million yuan. Among other things, the sales contract stipulated the following terms and conditions: within 10 days after the conclusion of the contract Buyer would make the advance payment of RMB 500,000 yuan and Seller was to deliver all the goods to the place of Buyer; the remaining price of RMB 1·5 million yuan should be paid within five days upon the delivery of goods; any breach of contract should be subject to the liquidated damages equivalent to 20% of the total price.

Buyer made the advance payment, but Seller did not deliver any goods. Buyer urged Seller to deliver the goods immediately, as its production would be seriously affected by the short supply of the goods. However, Seller declared force majeure as the reason for non-delivery. Seller insisted that it was only a trading company, not a producer of the chemical products. Seller alleged that upon the conclusion of the contract, it entered into a purchase agreement with a producer to buy the goods from the latter. Due to a fire accident, the producer could not supply the goods under the purchase agreement; Seller therefore could not deliver the goods to Buyer. Non-delivery of goods was due to force majeure that caused the failure to supply the goods by the producer to Seller.

Buyer refused to accept Seller’s argument and bought 10,000 kg of the same products for replacement at a price of RMB 220 yuan/kg, resulting in a total extra cost of RMB 200,000 yuan. Meanwhile it filed a lawsuit against Seller in the court, requesting liquidated damages of RMB 400,000 yuan (20% of the total price) and the damages of RMB 200,000 yuan for extra price caused for the urgent purchase.

Required:

Answer the following questions in accordance with the relevant provisions of the Contract Law, and give your reasons for your answer:

(a) state whether Seller’s argument of force majeure can be established;

(b) state whether Buyer’s claims for liquidated damages and damages should be supported by the court.