Zhu Qingyu: Compulsory Order and Legal Behavior

1. Private law autonomy and coercive order

2. Legal acts that violate legal prohibitions

(1) The effectiveness of legal norms and legal acts

(2) Mandatory provisions on effectiveness and management

(3) The type of legal prohibition

1. Formal discrimination

2. Substantive Discrimination

(1) Content Bans

Abstract Principles of Content Injunction and Disposition

(2) Imposition of a ban

(3) Pure order provisions

(4) Reference norms

3. Acts that are contrary to public order and good customs

(1) Public order and good customs

(2) Social public interests and public order and good customs

(3) Constitute conduct that violates public order and good customs

"The First Case of Public Order and Good Customs in China"

(4) Legal effect

Fourth, the form of compulsion

(1) The legitimacy of the formal conduct

(2) Legal effect

1. The legal act is invalid

2. Invalid Exceptions

(1) Correction of formal defects

(2) Effect as otherwise determined by law

(3) Application of the principle of good faith

Review of form compulsion

1. Safeguarding the interests of the parties

2. Safeguarding the interests of third parties

3. Safeguarding the public interest

1. Private law autonomy and coercive order

The legal act may involve a specific third party, and in this case, the "other governance" status of the third party can be corrected through the system of pending effect, and of course the legal act may also involve an unspecified third party. An abstract unspecified third person constitutes public order. The maintenance of the social community presupposes respect for the necessary coercive order, which cannot be altered by any individual will and is outside the realm of autonomy. Therefore, if the legal act is in conflict with the compulsory order, the validity of the act may be defective.

With binding force as the criterion, legal norms can be distinguished between arbitrary norms and mandatory norms. Arbitrary norms can be changed or eliminated for the parties, and cannot construct a coercive order. Those who represent the compulsory order are only the compulsory norms. Peremptory norms can be further divided into peremptory norms (directives), which instruct the parties to act positively, and prohibitive norms (prohibitions). Based on the autonomous nature of private law, the peremptory norms of private law are basically prohibitive norms. As a result, the violation of the compulsory order of legal acts is manifested in the form of violation of prohibited norms.

Legal norms can also be divided into rules and principles according to the degree to which the constituent elements are determined. The constituent elements of the rules are more specific and more certain when applied, but at the same time, they mean that the rules prohibit legal acts by way of enumeration. A list of prohibited behaviors is ostensibly a reflection of the idea that "freedom is not expressly prohibited by law" and is conducive to the preservation of private freedom. However, private interactions are far more complex than legislators' rationality. The norms of private law are abstracted from the conventions of public interaction, and the legislator can never specify all the customs in great detail, let alone foresee new taboos in communication. Therefore, in addition to the specific enumeration of rules, it must be supplemented by abstract principles to prevent private acts from encroaching on public order and good customs.

2. Legal acts that violate legal prohibitions

(1) The effectiveness of legal norms and legal acts

Article 58, Paragraph 1, Items 5 and 6 of the General Principles of the People's Republic of China stipulate that legal acts that "violate the law or the public interest" and "economic contracts violate the state's directive plan" are invalid. Among them, item 6, "economic contracts that violate the state's directive plan", is a product of the planned economy era, and has been expressly deleted by the Decision of the Standing Committee of the National People's Congress on Amending Some Laws adopted on August 27, 2009 because it "obviously does not meet the requirements of socialist market economy and social development"; In the latter case of item 5, "contrary to the public interest", it is interpreted as a provision of public order and good morals; As for the former "violation of the law", the meaning is obviously too broad, and the legislator seems to think that all "laws" are peremptory norms and cannot be "violated".

Article 52, Paragraph 5 of the Contract Law limits the General Principles of the People's Republic of China, according to which a contract is invalid only if it "violates the mandatory provisions of laws and administrative regulations". The restriction is manifested in two aspects: first, arbitrary norms are excluded; Second, the "mandatory provisions" that can be used as the basis for the invalidity of contracts are limited to the laws enacted by the National People's Congress and its Standing Committee and the administrative regulations formulated by the State Council, and do not include local regulations and administrative rules (Article 4 of Interpretation I of the Contract Law).

Nonetheless, the concept of Contract Law is still too broad in its use, because not all violations of "mandatory provisions" have the consequence of invalidating legal acts. For example, Article 149, Paragraph 1 of the Company Law provides that a director or officer of a company shall not commit an act in breach of the duty of loyalty, but under paragraph 2, if the act listed in paragraph 1 is committed, the corresponding legal act is not invalid, but only gives the company the right to attribution. To this end, Article 14 of Interpretation II of the Contract Law further defines "mandatory provisions" as "mandatory provisions" provided for in Article 52, Paragraph 5 of the Contract Law, which refers to mandatory provisions of validity.

After layers of restrictions, the corresponding norms can be expressed as follows: legal acts that violate the mandatory provisions on validity are invalid. The concept of "mandatory provisions on validity" can be seen earlier in the classification of Mr. Shi Shangkuan's provisions on validity and prohibition, and Article 15 of the Guiding Opinions on Commercial Contract Cases symmetrically uses "mandatory provisions on administrative provisions" to symmetrically "mandatory provisions on validity". It may seem like this statement is very rigorous, but it is synonymous and repeated. What it says is that if a mandatory provision would invalidate the legal act violated, then the legal act that violated the mandatory provision is null and void. The question is what kind of legal norm is a "mandatory provision of validity".

(2) Mandatory provisions on effectiveness and management

Article 14 of Interpretation II of the Contract Law only uses the mandatory provisions of validity as the basis for invalidation, which seems to mean that the difference between such norms and mandatory administrative provisions is whether it will lead to the invalidity of the contract. However, Article 15 of the Guiding Opinions on Commercial Contract Cases deviates from this: "If the mandatory provisions on validity are violated, the people's court shall find the contract invalid; Where mandatory administrative provisions are violated, the people's court shall determine their effectiveness based on the specific circumstances. "Determination of their validity on the basis of the specific circumstances" indicates that a mandatory administrative provision can also be a basis for invalidity. However, what is the significance of Article 14 of Interpretation II of the Contract Law?

The problems don't stop there. Article 16 of the Guiding Opinions on Commercial Contract Cases attempts to set out the criteria for judging the validity of mandatory provisions and administrative mandatory provisions: "If the mandatory norm regulates the contractual act itself, that is, as long as the contractual act occurs, it absolutely harms the national interest or the public interest, the people's court shall find the contract invalid." If the mandatory provisions regulate the parties' 'market access' qualifications rather than certain types of contractual acts, or regulate the performance of certain contracts rather than certain types of contractual acts, the people's courts should carefully grasp the determination of the validity of such contracts, and if necessary, should seek the opinions of the relevant legislative authorities or consult the courts at a higher level. Regrettably, even if we ignore the policy rhetoric that is deeply characteristic of China's judiciary, such as "seeking the advice of the relevant legislative authorities or consulting the courts at a higher level", the above criteria are still vague and even specious:

First of all, it is not easy to imagine that the conclusion of a debt contract alone would "absolutely harm the national interest or the public interest", but in the opinion of the Supreme Court, the severity of the "act of the contract itself" for "harming the national interest or the public interest" is obviously much higher than that of the "performance of the contract", so that the former is directly found to be invalid, while the latter "should be carefully grasped".

Secondly, the five grounds of invalidity listed in Article 52 of the Contract Law should be juxtaposed and therefore mutually exclusive when applied. Items 1, 2 and 4 are all clearly related to the "national interest" or "social public interest", and the "purpose" of item 3 is called "illegal" and naturally violates the "national interest or social public interest".

Thirdly, the qualification for "market access" is also "should be carefully grasped", but since the government, which is responsible for safeguarding the public interest, creates a threshold for market access, why does crossing the threshold not harm the public interest? In this case, how to distinguish between mandatory provisions of validity and mandatory provisions of administration? For example, Articles 9 and 14 of the Regulations on the Administration of Precursor Chemicals are on the qualification control of "market access" for the operation and purchase of precursor chemicals, which are mandatory administrative provisions. In fact, the Supreme Court's judicial interpretation on "market access qualifications" does not seem to show much hesitation in including it within the scope of Article 52, Paragraph 5 of the Contract Law, such as Articles 1 and 4 of the Interpretation of Construction Contracts.

The classification of mandatory provisions of validity and mandatory provisions of administration is the result of legal interpretation, which naturally cannot be used as a basis for judging the type of norms, and the judicial interpretation of the Supreme Court is even hesitant in terms of classification criteria, and the basis for judgment provided is even more useful. In that case, why not look elsewhere and look at the impact of peremptory norms on the validity of legal acts from a different perspective?

(3) The type of legal prohibition

As early as Roman law, legal prohibitions were divided into perfect laws, sub-perfect laws, and incomplete laws according to their consequences. Legal acts that violate all laws are invalid; In the case of violation of the sub-perfect law, the validity of the act will not be affected, but the perpetrator will incur criminal penalties; As for incomplete laws, they are only prohibitions, and there are no sanctions imposed on violators. Although this classification may not be fully consistent with modern law, the basic idea has remained to this day. However, as to the arbitrary or mandatory nature of legal norms, the legal norms themselves often do not give a clear answer and need to be determined through interpretation.

1. Formal discrimination

If the words are well-worded, the use of words can convey the message of the type of ban. In Germany law, legal prohibitions are mainly expressed in three ways: "shall", "not permitted" and "must not", which are the opposite of mandatory norms, licensing norms and authorization norms, respectively. In the event of a violation, the legal effect varies. Among them, the violation of the prohibition of "shallows" does not invalidate the legal act; Whether the legal act is invalid in violation of the "inadmissible" prohibition depends on the specific normative intent; Violation of the "cannot" injunction invalidates the legal act.

The advantage of formal discrimination is that it is clear, but it also has obvious limitations:

First of all, the requirements for the academic quality of legislators and the accuracy of legislative language are too high, and it is not feasible in the mainland.

Second, overemphasizing the verbal signs of the prohibition may be mechanically rigid or even abandoned, because the normative function is, after all, embodied through the substantive normative intent rather than the external form. For example, article 181 of the German Code states that an agent "cannot act" in self-act, and that a legal act is absolutely null and void if this prohibition is violated by the word, but the German general doctrine holds that such a determination is contrary to the normative intent and should be interpreted in a light-ennied manner.

For example, the first sub-sentence of article 232 of the Criminal Law stipulates that "whoever intentionally kills a person shall be sentenced to death, life imprisonment or fixed-term imprisonment of not less than 10 years". Therefore, formal judgment only constitutes a preliminary judgment or an auxiliary judgment.

2. Substantive Discrimination

A more reliable criterion lies in the substantive normative intent, i.e., the purpose of the legal prohibition through the prohibition of conduct. Based on this criterion, legal injunctions can be divided into content prohibitions, enforcement prohibitions, and pure order provisions.

(1) Content Bans

A content injunction is an absolute injunction that prohibits the parties from agreeing to the content or the realization of the legal effect they are pursuing.

For example, entering into a contract of appointment for homicide is a breach of the content prohibition.

Legal acts that violate the content ban are invalid, otherwise they would be paradoxical: on the one hand, the consensual content is prohibited, and on the other hand, the agreed obligations should be fulfilled.

Abstract Principles of Content Injunction and Disposition

If the abstract principle of disposition (act in rem) is pursued, in general, the content prohibition only leads to the invalidity of the burden act, and the disposition act as a performance act is not affected because the purpose is not involved, and the effect is not affected, but the giver of the benefit can enjoy the right to claim return under the unjust enrichment law.

For example, a contract of gift for the purpose of bribery is invalid because it violates the provisions of article 385 et seq. of the Penal Code, but the transfer of ownership for the purpose of fulfilling the contract of gift must be observed separately. Specifically, it can be divided into two situations:

First, if the bribe giver transfers ownership based on his free will, there is no defect in the validity of the transfer of ownership, and the bribe giver can only consider the return of unjust enrichment; Second, if the bribe giver transfers ownership as a result of soliciting bribes, in addition to the right to claim the return of unjust enrichment, it may also consider revoking the transfer based on coercion, so as to obtain the property according to the right to claim for the return of the property. This disparate legal effect is also relevant in the field of criminal law.

When a bribe recipient is subject to confiscation of property under article 383 of the Penal Code, it is important to define the property that can be confiscated.

Paragraph 1 of Article 9 of the Provisions on the Enforcement of Property in Criminal Judgments states: "Where a sentence of confiscation of property is given, the property lawfully owned by the person subject to enforcement at the time the criminal judgment takes effect shall be enforced. "In addition, in accordance with paragraph 1 of article 13, the material debt incurred by the person subject to enforcement shall be paid off before the confiscation of property. This means that while things belonging to others cannot be confiscated, the right of others to claim restitution must also be satisfied first.

Accordingly, whether or not the transfer of ownership is based on the free will of the bribe-giver, the bribe appears to be excluded from the confiscation of property. However, under the law of unjust enrichment, if the bribe giver is himself at fault, his right to claim restitution must be excluded (see the jurisprudence of § 817 of the German Code) and the bribe must be confiscated. In this way, the distinction between active bribery and passive solicitation is not only embodied in Article 389, Paragraph 3 of the Criminal Law, but also echoed in the field of law with the help of the abstract principle of property rights, which can be regarded as permissible.

On the other hand, if the act of disposition has a cause or even denies the independent existence of the act of disposition, the bribe contract is invalid and the bribe giver still retains the ownership of the bribe. When the bribe-taker is sentenced to confiscate the property, the bribes do not belong to the bribe-taker, and if they are confiscated together, there is no sufficient legal basis, but if the bribe-giver has the right to take back the property, it is obviously not justified; Although the court can identify all bribes as stolen goods and recover them in accordance with Article 10 of the Provisions on the Enforcement of Property in Criminal Judgments, the legitimacy of those who are passively claimed is also questionable.

Of course, if the content ban not only prohibits the content of the burden act but also refuses to transfer the benefits arising therefrom, the burden act and the disposition act are invalid. At this time, the ownership has not been transferred, and the disposer can claim the return as the owner.

For example, paragraph 2 of Article 16 of the Regulations on the Administration of Precursor Chemicals stipulates that individuals shall not purchase Class 1 and Class 2 precursor chemicals listed in the Regulations. According to its normative intent, this provision prohibits both the conclusion of contracts for the sale and purchase of such chemicals with individuals and the acquisition of ownership by individuals, so that both the burden and the disposition are null and void.

(2) Imposition of a ban

If the legal prohibition does not address the content of the act, it is only the act itself that is prohibited, which is called the implementation injunction. Mr. Shi Shangkuan's so-called prohibition provisions are similar in definition: the prohibition provisions "focus on the factual value of the violation, with the purpose of prohibiting the act". However, Mr. Shi's prohibition is only to prevent his actions, not to invalidate them; The imposition of an injunction under Germany law generally renders the legal act null and void. Based on the similarity of the effects on the validity of legal acts, many Germany scholars advocate that the enforcement of the ban should also be classified as a content ban, and that no distinction should be made between the two.

However, in Bork's view, imposing a ban is not the same as a content ban. Violations of the law enforcing the prohibition are invalid, not because there is anything wrong with the content of the act, but because such an act will have unjust consequences.

For example, the sale of stolen goods (article 312 of the Penal Code) is prohibited not because the agreement on the transfer of the subject matter or the agreement on the payment of the price is contrary to justice, but because the subject matter is the proceeds of theft.

Furthermore, there are few exceptions to the invalidity of legal acts that violate the content ban, and there are invalid exceptions for violations of the enforcement ban. There are two main exceptions to the invalidity of the injunction for breach of the enforcement injunction, which are unilateral injunctions and unilateral violations of the injunctions of both parties.

First, it is a unilateral injunction, such as Article 149, Paragraph 1 of the Company Law, which only regulates the company's directors or executives. According to paragraph 2 of this article, only the company has the right to attribute the income of the directors or officers. In contrast, content injunctions, regardless of whether they are unilateral or both, will innumerate the legal acts violated, such as the latter part of Article 40 of the Contract Law and Article 26 of the Consumer Law.

Second, although the injunction imposed by both parties regulates both parties at the same time, if only one party violates it, the legal act may be valid for the benefit of the honest and trustworthy counterpart, or its validity shall be determined by the honest and trustworthy counterpart. The former is like a contract of sale between a bona fide purchaser and a seller of stolen goods, while the latter is like malicious fraud. On the other hand, a content ban invalidates a legal action regardless of whether it is violated by one party or both.

(3) Pure order provisions

The object of regulation of pure order is the external environment of legal acts such as time, place, type, and manner. Because it is not directly aimed at the legal act itself, it can be called a relative injunction.

Pure order provisions only create a fair and just order environment for legal acts, and those who violate them will incur administrative and even criminal penalties, but the effectiveness of the specific legal acts involved will not be affected. In this sense, the pure order provision does not actually belong to the "mandatory provisions" within the meaning of Article 52, Paragraph 5 of the Contract Law, or in other words, it does not belong to the legal prohibition in the sense of private law.

For example, Article 28 of the Regulations on the Administration of Entertainment Venues ("Entertainment establishments shall not operate between 2 a.m. and 8 a.m. daily") is a regulation of business hours, and if violated, entertainment establishments will face administrative penalties (Article 48 of the Regulations on the Administration of Entertainment Venues), but the validity of legal acts carried out during this time period will not be affected.

(4) Reference norms

Article 52, paragraph 5 of the Contract Law is similar to Article 134 of the German Code and Article 71 of the Taiwan Civil Code. Such norms only show legal effects, but have no provisions constituting the elements, and are blank norms and may not be cited separately as the basis for adjudication.

Moreover, there is no room for the application of a blank norm if other, more specific private law norms already contain provisions on legal effects or what type of prohibition can be known by interpretation. Therefore, the function of Article 52, Paragraph 5 of the Contract Law, as an incomplete norm, is not mainly to combine with other private law norms that supplement the constituent elements to form a complete norm, but to introduce other laws, especially the prohibited norms in public law and criminal law, into private law by referring to the constituent elements (referential norms), and to act as an intermediary bridge between private law and public law.

3. Acts that are contrary to public order and good customs

(1) Public order and good customs

Conceptually, "public order and good customs" are often divided into "public order" and "good customs", which are the conceptual usage of Article 6 of the France Code ("No person may violate the law on public order and good customs by special agreement") and Article 72 of the "Civil Law" of Taiwan ("Legal acts that are contrary to public order or good customs shall be invalid"). The general theory and judicial practice in Taiwan believe that public order and good customs are not the same and should be judged separately, among them, public order is the value system of the law itself, referring to the "general interests of society", and "good customs" are ethical orders outside the law and are "general moral concepts of society".

The concepts can be defined separately, but in practice, the boundaries between them are difficult to grasp, and since the functions of public order and good customs are the same, both of them invalidate the legal act that has been violated, so the two are often referred to as "public order and good customs".

The German Code is different in that article 138, paragraph 1 ("Void of legal acts contrary to good customs") uses only the concept of good customs, while public order is considered to be a concept in the field of private international law.

(2) Social public interests and public order and good customs

Our positive law does not take "public order and good customs" as the influencing factor for the validity of legal acts, but in terms of interpretation, it is generally said that "social public interest" and "social morality" are given the value of "public order and good customs" through Article 7 of the General Principles of the Law.

Article 7 of the General Principles of the Law stipulates that: "Public affairs shall respect social morality and shall not harm the public interest, undermine the national economic plan, or disrupt the social and economic order." There is no doubt that the "most important "public activity" is a legal act, and therefore, it may be roughly assumed that the "public interest" has its significance mainly in the field of legal acts. Taking the public interest as the factor controlling the effectiveness of legal acts is implemented by the General Principles of the Law and the Contract Law. Paragraph 3 of Article 55 of the General Principles of the People's Republic of China stipulates that "not violating the public interest" is a negative element of "legal acts", and Article 58, Paragraph 1, Item 5 invalidates the "civil acts" that "violate the public interest". Article 52, Paragraph 4 of the Contract Law is the same as its provisions.

It is also in this context that the "basic principles" status of Article 7 of the General Principles of the United Nations Law is interpreted. However, scholars generally replace the expressions of "social public interest" and "social morality" with "public order and good customs". Professor Liang Huixing pointed out: "According to scholars, the so-called 'social public interest' and 'social morality' in China's current law are equivalent to the principle of public order and good customs in nature and function, and 'social public interest' is equivalent to 'public order' and 'social morality' is equivalent to 'good customs'. Professor Wang Liming also said: "Although the current legislation on civil affairs in mainland China does not adopt the concept of public order and good customs, but adopts the concepts of social public interest and social public morality, they all express the same meaning. ”

However, when used, there is no strict correspondence between "social public interest" and "public order", "social morality" and "good customs", and in fact, the concepts are often used interchangeably and are never clearly distinguished. For example, Professor Wang Liming pointed out that the act of disrupting the order of social and economic life is certainly contrary to the public interest, and the concept of social public interest also includes the content of public morality, so "taking the public interest of society as an element for measuring the effectiveness of legal acts is also conducive to safeguarding social public morality". In this regard, it seems that it is not indispensable to correspond to either the concepts of "social public interest" or "social morality" to "public order and good customs".

However, at least literally, the concepts of "social public interest", "social morality", "public order" and "good customs" have different meanings. For example, the so-called "good customs" in the German Code are defined in its "Legislative Reasons" as "the ceremonial conception of all thinkers of fairness and justice". It is called the concept of etiquette, and it focuses more on ethics and morality. However, the so-called social public interest in my positive law is often defined as "the benefit enjoyed by all members of society" and "it is a concept corresponding to private interests". Although ethical concepts are far from "interests", even "public order" is not necessarily the same as "public interests". For example, Mr. Yao Ruiguang believes that it is inappropriate to define "public order" as "general social interest" in Taiwan, because "order" does not mean "interest", and it is easy to confuse "public order" with "public interest" to define "public order".

The embarrassing situation of inconsistency between name and reality is also recognized by mainland scholars, so Professor Liang Huixing suggested that "in view of the non-legal normative terms of 'social public interest' and 'social morality', and the requirements of international standards, the general legal concept should be adopted instead." It is proposed that, in the formulation of the Code, the provisions of Article 7 of the General Principles of the Legislative Code should be used as the basis for 'public interest' and 'social morality' and 'public morality' should be replaced by 'public order or good customs' and 'public activity' should be replaced by 'the content or purpose of legal acts'". Scholars such as Professor Ma Junju and Professor Wang Liming have made similar suggestions. If this is the case, the concept of "social public interest" can be withdrawn from the field of legal acts.

Of course, interpreting the "social public interest" clause as public order and good customs is too far from the meaning of the text, and it seems to be somewhat self-colonizing in academic terms. A more straightforward and local interpretation is that the so-called "social public interest" in my positive law is only the type of interest opposed to private interest, and there is no need to make other extensions. But even so, what is meant by "the type of interest as opposed to private interests" needs to be explained. This interest may be the common interest of the majority of members of society, which corresponds to the "minority interest" or "individual interest", or it may be the interest of the "representative" of society, i.e. the collective interest or the national interest.

If the former is the case, it means that the legal acts between private individuals will be invalid because they are inconsistent with the interests of the majority, which is a social utilitarian approach, which will make private individuals have the obligation to take care of and even enhance the interests of others when pursuing their own interests through legal acts, which is considered to be neither possible nor justifiable. Corresponding the public interest to the collective interest or the national interest is not in line with the conceptual use of positive law. According to Article 52, Paragraph 4 of the Contract Law, as long as it "harms the public interest", the legal act is invalid; However, in addition to "harming national interests", the invalidity provided for in Paragraph 1 of the same Article must also meet the elements of fraud or coercion, and the invalidity of Paragraph 2 must meet the elements of malicious collusion in addition to harming the interests of the "state or collective", in other words, simply harming the interests of the state or the collective is not sufficient to invalidate the legal act. It can be seen that, at least in the Contract Law, the concepts of "social public interest" and "national interest (collective interest)" are deliberately treated differently and should not be equated.

In this regard, the analogy of "social public interest" to public order and good customs, although it is self-defeating, can barely make this provision meaningful, and is the most desirable of all possible interpretations.

(3) Constitute conduct that violates public order and good customs

Public order and good customs are uncertain legal concepts, which belong to the principles outside the rules (general terms), and the significance is to provide a channel for value judgments to enter the positive law, and thus realize the law-making by judges. Taking principles as a supplement to the rules means that there are no clear constituent elements to grasp, and the judgment needs to be comprehensively considered in combination with the specific subjective and objective circumstances.

In Germany law, the good-faith clause is defined mainly by means of a typology of judicial precedents. These types of cases mainly include: abuse of power or monopoly position, binding of contracts, endangerment of creditor's rights and credit fraud, instrumentalization of legal acts, especially the commercial exploitation of personal private domain (such as prostitution, sex trafficking, etc.), endangering marriage and family order, inducing breach of contract (such as secondary sales for the purpose of stimulating the seller's default), bribery agreements, buying and selling public positions, degrees or titles of nobility, quasi-profiteering, etc.

"The First Case of Public Order and Good Customs in China"

In 2001, an inheritance dispute case occurred in Luzhou, Sichuan, known as "the first case of public order and good customs in China". The term "first case" not only speaks of its great influence, but also shows that there are not many people in mainland judicial precedents who explicitly appeal to public order and good customs.

The deceased bequeathed his personal and part of the estate he shared with his wife to his cohabiting lover, and the wife refused to surrender the property involved in the will, and the legatee sued the court. The courts of first and second instance [(2001) Naxi Yi Chu Zi No. 561 and (2001) Lu Yi Zhong Zi No. 621] both held that the deceased had a spouse but cohabited with another person outside of marriage, which violated the provisions of Articles 2 to 4 of the Marriage Law, and the deceased even bequeathed property to the lover, which violated social morality, and therefore, "the bequest violated the provisions of the law and public order and good customs, harmed social morality, and undermined public order, and should be invalid", and therefore rejected the plaintiff's claim in accordance with Article 7 of the General Principles of the Law.

There is no room for controversy as to whether there is room for the application of the public order and morals clause in this case. Unfortunately, in terms of legal technology, there are many loopholes in the conceptual use and legal argumentation of the judgment in this case. In addition, Article 7 of the General Principles of the Civil Law does not contain provisions on legal effects, and it is also quite inappropriate to use it alone as a basis for invalidity, and should at least be combined with Article 58, Paragraph 1, Paragraph 5, Circumstance 2 of the General Principles of the General Law.

(4) Legal effect

In accordance with the provisions of Article 58, Paragraph 1, Paragraph 5 of the General Principles of the Law and Article 52, Paragraph 4 of the Contract Law, legal acts that are contrary to public order and good customs (social and public interests) are invalid.

There are two other things to note. First, if the law regulates other acts of undecency, that specific norm shall prevail. For example, acts such as fraud or coercion are, by their nature, contrary to public order and morals, but in this case, the law clearly considers that the free will of specific parties is more worthy of attention than an abstract coercive order, and therefore lists them separately and regulates them separately. In such cases, the norms relating to fraud or coercion should take precedence. Second, in principle, only the burden behavior can have the problem of paramorality, and the punishment behavior has nothing to do with ethics because of its neutrality in purpose and value. Therefore, unless the act of disposition is detrimental to the interests of a third party, it will not be invalid because of perverseness.

Fourth, the form of compulsion

(1) The legitimacy of the formal conduct

The above-mentioned regulation of legal acts focuses on the substantive adjustment of the content of the acts. In order to maintain public order, the law may also regulate the form of conduct. In addition to formal freedom, there are also formal coercive norms (the last sentence of Article 56 of the General Principles of the Law and the first sentence of Article 10, Paragraph 2 of the Contract Law), so legal acts are classified into non-formal and mandatory acts. In addition to the statutory form, the parties may also establish individual norms of formal compulsion in accordance with the legal act, which is called the form of agreement. The form of agreement provided for in the last sentence of paragraph 2 of Article 10 of the Contract Law is only in written form.

The agreement is the result of the free will of the parties, and there is no need to ask for the legitimacy separately.

The reasons for the statutory essentials are mainly summarized as follows: first, the function of clarification and evidence, with the help of the statutory essentials to fix the content of the legal act and make the legal relationship clear; Second, the information and publicity function, the content of legal acts fixed by statutory forms can provide accurate information for the parties, in the field of the company, and can be publicized to the company's investors for future reference; third, the warning function to avoid the parties being in a hurry; Fourth, the consultation function, in the practice of notarization and other legal forms to get professional advice; Wait a minute.

(2) Legal effect

1. The legal act is invalid

Article 36 of the Contract Law stipulates that: "Where laws, administrative regulations or the parties agree to conclude a contract in written form, and the parties do not adopt the written form but one party has performed its main obligations and the other party accepts it, the contract shall be established." From this, it can be seen that: first, the statutory requirements and the agreed requirements are treated equally; Second, if the main obligation is not fulfilled or the other party refuses to accept it, the contract for breach of formal compulsion shall not be established according to the negative interpretation. This "is not established", and the legal effect is no different from invalidity.

If the legal act is required, in principle, the modification must also be required, otherwise the modification cannot take effect, such as the last sentence of paragraph 1 of Article 35 of the Labor Contract Law: "The modification of the labor contract shall be in written form." The first sentence of Article 24 of the Security Law even provides for an aggravating result: when the creditor and the debtor agree to modify the main contract, the guarantor will no longer be liable for the guarantee without the written consent of the guarantor. In this case, not only does the change of the main contract not bring about the corresponding change of the guarantee contract, but the guarantor also has the right to claim exemption from liability for the guarantee liability stipulated in the original guarantee contract.

If, however, the obligations of the person protected by formal compulsion are curtailed, the modification need not be invalidated by reason of formal defects, since there is no need for special protection. For example, if the guarantor's guarantee liability is reduced by changing the guarantee contract, the guarantor's written consent is not required, and in accordance with Article 30 of the Interpretation of the Guarantee Law, if the quantity, price, currency, interest rate and other contents of the main contract are changed, the guarantee contract will be changed accordingly, or even without the consent of the guarantor.

In principle, the violation of the convention is dealt with in the same way as the statutory form, which is also the basic position of Article 125, paragraph 2 of the Germany Code. However, after all, the form of agreement is only an individual norm established by the parties themselves, and its intent needs to be interpreted by the parties in true intention. If it can be seen through interpretation, if the parties want to take the form of the agreement as a condition for the validity of a legal act, the agreement will be created and effective, and the consequences of violating it will be invalid. However, if the parties only intend to use it as a means of proof for the conclusion of the contract, it will only have the effect of declaration, and even if there is a breach, it will not affect the validity of the legal act. In addition, since the agreement is the result of the will of the parties, it can be annulled at any time according to the will of the parties, and the form of expression of intention to repeal is free - as long as it can be known that the expression of intention is the true intention of the parties, it is sufficient. However, it can be seen that it does not make much sense to equate the agreed formula with the statutory formula.

2. Invalid Exceptions

(1) Correction of formal defects

Formal defects may be remedied by the act of performance. According to Article 36 of the Contract Law, in order to remedy formal defects, two conditions must be met: "one party has fulfilled its main obligations" and "the other party has accepted". The so-called "performance of the main obligation" should be the main part of the principal payment obligation, and does not include the subordinate payment obligation or the ancillary obligation; The so-called "acceptance by the other party" means that the creditor receives payment. The reason why the act of performance can remedy the defect of form is that the warning and evidentiary function of the act of performance is excluded by the act of performance.

In addition, Article 36 of the Contract Law does not limit the type of contract to be performed and corrected, and in principle, unless there is a provision to the contrary, all contracts in the form of statutory written requirements can be performed and corrected.

(2) Effect as otherwise determined by law

The statutory requirements are not necessarily intended to control the validity of legal acts. If the law clearly stipulates the legal effect for those who fail to comply with the statutory requirements, such provisions shall prevail. A typical example is article 215 of the Contract Law: "If the term of the lease is more than six months, it shall be in writing." If the parties do not adopt the written form, it shall be regarded as an indefinite lease. ”

(3) Application of the principle of good faith

In specific cases, a party's claim that the legal act is invalid on the ground of formal defects may violate the principle of good faith, in which case formal defects can be ignored. For example, a malicious fraudster on the issue of the form may not claim invalidity on the grounds of lack of form, and if the defrauded person requests performance, the contract should be effectively treated in the interests of the honest and trustworthy defrauded party.

Review of form compulsion

Formal coercion is a restriction on the autonomy of private law and must be justified for a sufficient reason. As mentioned above, the statutory form has various functions such as clarification and evidence, information and publicity, warning, and consultation. These functions are not embodied in all forms of coercion at the same time, but serve to protect the interests of the parties, third parties or the public according to the specific circumstances. It seems far-fetched to favour formal compulsion, and in particular to make it an effective norm.

1. Safeguarding the interests of the parties

"Safeguarding the interests of the parties" is the most important reason in favor of formal compulsion, which is mainly reflected in the warning function and the clarification and evidence function. The former is intended to remind the parties to pay enough attention to important legal acts so as not to be in a hurry; The latter provides definite evidence of the execution of the legal act and its content in order to prevent or resolve disputes.

Generally speaking, the importance of a legal act depends on the parties' substantive evaluation of the interests involved, and is not directly related to the form itself. If the parties themselves believe that a particular interest is insignificant, they may be careless in signing the form of the document, even if the law compels it to take a particular form. On the other hand, the cautiousness of the parties can be manifested in a variety of ways. The verbal form does not necessarily lack the necessary caution, especially in the case of parties who emphasize the "one-size-fits-all" attitude to life. More importantly, the bearer of the consequences of a legal act is the party who has committed the act of freedom, and it is up to the parties themselves to determine which mode of conduct is more conducive to protecting their interests. Therefore, even if the law determines the importance of a legal act based on objective criteria, but considers it necessary to remind the parties to pay attention to it, all that can be done is to put it forward in the form of a suggestion - which is manifested as an arbitrary norm, but there is no reason to make a judgment on behalf of the parties as a mandatory norm.

However, in practice, the status of the parties to a contract is often not equal. In the name of justice, the law is often called upon to provide special protection to a certain section of the population, especially the weak. Since the statutory form has the function of information transparency and explanation, it seems that the formal compulsion has gained legitimacy, such as the consumer loan contract, insurance contract, labor contract and other stereotyped contracts.

However, the unequal economic status of the parties to a transaction does not in itself constitute legal irlegitimacy, and thus cannot be subject to the control of the law. The law should be concerned rather than whether the economic dominant position was obtained through improper means, and whether the party to the transaction took advantage of its economic dominant position to exert undue influence on the formation of the will of the other party. Justice, on the other hand, is a "principle of conduct that treats the same or essentially the same type in the same way" [199] and "is not concerned with the outcome of various transactions, but only with the fairness of the transactions themselves". [200] Thus, "only the deeds of a person can be called just or unjust." [201] Correspondingly, in the case of "injustice", the remedy available to the opposing party should be the expression of the will to act freely with the help of the law.

The significance of saying that "the legal form has the function of information transparency and explanation" is to prevent the trading party from interfering with the formation and expression of the other party's free will by concealing relevant information. In other words, it is the question of whether free will has been unduly influenced.

The formal requirement merely provides a possible means for the law to defend free will, but has no causal connection with the validity of the contract. Specifically:

First, since the purpose of legal remedies is to safeguard free will, the criterion for judging whether the validity of a contract is flawed should be whether the free will of the other party has been violated. In this case, in cases such as fraud and coercion, the law recognizes that the other party's right of revocation and the right to claim damages are sufficient, and there is no need for the law to directly determine that they are invalid. Leaving control of the validity of a contract in the hands of the parties themselves is the essence of private law autonomy.

Second, if the purpose of a legal regulation is to provide protection for one party, the object of its regulation should be the party with the advantage of the transaction. If the breach of the statutory form requirement is caused by the dominant party to the transaction, it may not be beneficial to the other party to invalidate the contract. Because the invalidity of the contract means that the party with the advantage of the transaction can be exempted from the contractual obligations, even if the other party wants to obtain the benefits of contract performance, it is not possible. Therefore, it is more effective to protect the parties to the contract by imposing a contractual disadvantage on the party who violates the statutory formal requirements.

Thirdly, in practice, in many important situations, the parties will enter into a contract in writing or in other specific forms, regardless of whether the law compels it or not. In this case, the parties adopt a particular form, not so much because they are compelled by law, but rather because they consider their own interests. Therefore, as long as the parties have sufficient motivation to calculate their own interests, it is superfluous for the legislator to support the statutory form with a mandatory effect norm. Moreover, given the complexity of life and the fact that the legislator is unlikely to have comprehensive knowledge, his "good faith concern" may lead to inconvenience for the parties: indiscriminate statutory form requirements will inevitably increase the cost of contracting, and may even prevent legitimate transactions that should have taken place.

Further, if the formal coercion claims that it is intended to protect the interests of the parties, and then denies it when the actor himself believes that a better way of dealing exists, then the only explanation can only be that the law considers that the parties do not have the capacity to make reasonable judgments for themselves, but must be judged by an omniscient and omniscient legislator. This assumption that all persons are under guardianship is clearly contrary to the idea of private law autonomy. Rather, it is correct to think that the division of knowledge not only makes all individual knowledge exist in a scattered and incomplete way, but that anyone must inevitably be in a state of eternal ignorance, so that "no one can know 'who' knows best" as to the interests of the actor, and that the only way we can find is through a social process in which everyone tries to see what he can do". [202] Only in this way can individual liberty not be lost by excessive interference of public power.

In addition, if the purpose of the statutory form is to determine the content of the legal act and to provide evidence in the event of a dispute, so as to reduce, shorten or simplify the litigation procedure, then the legal effect should be reflected in the field of procedural law, but the legal act should not be substantively determined to be invalid or invalid. Specifically, the parties bear the burden of losing the lawsuit for the inability to prove the contents of the contract that should have been concluded in a statutory form. In this case, the reason why the parties lost the case was not that they did not comply with the statutory form when carrying out the legal act, but simply because they failed to adduce evidence. In other words, "whether the contract is in written form or oral form or other tacit form is only a difference in the difficulty of proving the existence of a contractual relationship, not a difference in the merits of the contract itself". Therefore, the so-called statutory form should be able to be excluded by the intention of the parties.

2. Safeguarding the interests of third parties

Medicus argues that the statutory form must be complied with on the basis that certain third parties "are not parties to the execution of legal acts, but for whom those acts are effective". An example of this is that the acquirer of immovable property is informed by the provisions of section 550 of the Germany Code on written lease contracts that the acquisition of immovable property will be subject to the sale and purchase of unbroken lease rules in section 566.

In the rule that the sale and purchase does not break the lease, if the transferee of immovable property can learn about the existing lease relationship through the written lease contract, it will help to protect its interests, but it is not enough to conclude that formal compulsion is a valid norm: first, according to Article 550 of the German Code, even if the parties do not sign the lease contract in writing, it is not invalid and is presumed to be an indefinite lease (the same is true in the latter sentence of Article 215 of the Contract Law). Secondly, even if the lease contract lacks written form, the transferee of the immovable property cannot directly determine that the lease relationship does not exist on this basis, and claim to exempt the sale from the restriction of the lease rule. Therefore, although formal coercion may protect the interests of third parties to a certain extent, it does not seem to be strong enough to invalidate the legal act that has been violated.

3. Safeguarding the public interest

According to Medicus, the utility of the statutory form in safeguarding the public interest is mainly manifested in the form of "contributing to the reduction of the burden of data management, the control of the approval process and the taxation". In order to ensure the ability to provide public goods to society, the government has the right to levy taxes on private individuals. Since the government can neither do nor allow real-time monitoring of transactions at all times, the statutory form requirement becomes an effective means to prevent parties from evading tax obligations. However, where the transaction is required to be in a statutory form for the purpose of taxation, such a regulation should be a purely order requirement. If there is a violation, the party may incur administrative or even criminal penalties, but the legal act involved does not have to be invalid. The same is true for "reduction of data management burden" or "control of the approval process".