SPC: The contract stipulates that "it shall take effect after being signed and sealed by three parties", and whether the clause signed by only two parties is established and effective

Source: Civil Law Reference

Transferred from: House of Justice

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Although the agreement stipulates that "it shall take effect after being signed and sealed by the three parties", according to the principle of contractual relativity, the purpose of the agreement is not to require that all clauses be signed and sealed by the three parties and then take effect, the settlement agreement between the creditor and the debtor is established and effective after being signed and sealed by both parties, and the failure of the guarantor to sign and seal only produces the legal consequences of the unconstituted security clause and does not affect the establishment and effectiveness of the main contract clause. The debtor's claim that the guarantor's failure to sign the seal would result in the non-validity of all the terms of the contract would not be upheld.

Upon review, the Court held that the case involved the validity of the Letter of Agreement. The Agreement involved in the case was an agreement between Haina Company and Xu Jiaxing on the termination and settlement of the Cooperation Agreement, and it was agreed that Haina Investment Company would provide a guarantee for Haina Company's liquidation obligations. Accordingly, the Letter of Agreement involves two legal relationships, one is the legal relationship between Haina Company and Xu Jiaxing to terminate the Cooperation Agreement and Haina Company's repayment of Xu Jiaxing's advance payment; the other is the legal relationship between Haina Investment Company to assume the guarantee liability for Haina Company's repayment obligations, the former is the main contractual relationship, and the latter is the subordinate contractual relationship. The main contractual relationship occurred between Haina Company and Xu Jiaxing, and was not involved with Haina Investment Company, and the contractual relationship occurred between Xu Jiaxing and Haina Investment Company. It can be seen from this that although Article 7 of the Agreement stipulates that "it shall take effect after being signed and sealed by the three parties", according to the principle of contractual relativity, the purpose of the agreement is not to require all the clauses in the Agreement to be signed and sealed by the three parties before it takes effect, but that the settlement agreement between Haina Company and Xu Jiaxing is established and effective after both parties sign and seal, and the guarantee contract between Xu Jiaxing and Haina Investment Company is established and enters into force through the signature and seal of both parties. In this case, since Haina Company and Xu Jiaxing had both signed and sealed, and Haina Investment Company had not sealed it, the main contract clause in the Agreement had been established and took effect, but only guaranteed that the contract clause was not established. Therefore, the original trial concerned that the guarantor, Haina Investment Company, did not sign the Letter of Agreement, which only produced the legal consequences that the guarantee contract (clause) was not established, and did not affect the correct determination of the validity of the main contract, and this court upheld it. Haina Company believes that there is no corresponding legal basis for Haina Investment Company's application for failure to sign and seal the Agreement and cause all the provisions of the Agreement to be invalid, and this court does not support it.

Regarding the amount of advance payment that Haina Company should repay to Xu Jiaxing. According to the agreement involved in the case, Haina Company needs to repay three expenses and corresponding interest to Xu Jiaxing: first, as of May 22, 2015, Xu Jiaxing paid 20.9344 million yuan for cooperation to Haina Company; second, 3.2 million yuan owed by Haina Company to Xu Jiaxing on October 10, 2015; third, the project payment and related expenses originally advanced by Xu Jiaxing in the Zhongshan Road Reconstruction Project in Shangrao City have not yet been settled. The first two contents have been jointly confirmed by both parties in the "Agreement", and as for the amount of the third fee, Xu Jiaxing will provide information and bills according to the "Agreement", and will be settled and repaid separately after being examined and approved by Haina Company. Xu Jiaxing provided relevant evidence in the original trial, such as the renovation of the old auditorium of the Shangrao Military Sub-district and the settlement table of the wall project, proving that the amount of this payment was 1,655,243 yuan, but Haina Company did not provide contrary evidence to overturn it. Therefore, the original trial found that the amount payable by Haina Company was the sum of the above three sums of 25,789,643 yuan, and the factual basis was sufficient, and this court upheld it. Haina Company believes that the amount payable should not be determined in accordance with the provisions of the "Letter of Agreement", there is double calculation of the arrears of 3.2 million yuan, the responsibility for the suspension of the project involved in the case should not be borne by Haina Company, and the application grounds for the 6 million yuan paid to Wang Jianwen should not be repaid by Haina Company are inconsistent with the agreement between the two parties in the "Agreement", and this court does not accept it.