If a contract with security function is not legally invalid, it shall be valid

2022-06-05 0 By

Private lending as one of the most flexible way of financing, play an indispensable role in the present economic operation, however, parties to an efficient, convenient, low cost and is driven by the interests of can guarantee form of folk lending breaks through the traditional mode of legislation regulation, guarantee the increasingly presents the diversity and complexity of forms of expression.T company and C company signed a mortgage loan contract, agreed: T company to C company to lend 2 million yuan, C company to its development of 19 houses as loan mortgage.Under the requirements of COMPANY T, Company C signed commercial housing pre-sale contracts with four employees, including Yang Mou Zhou, and went through registration and filing.Later, the dispute between the two parties resulted in a civil settlement document, which stated that C Company should repay THE loan principal of 2 million yuan and interest to T Company in a lump sum.When C company fails to fulfill its repayment obligations, T Company applies for execution.The case involves the building to occupy by Zhao mou, use.C company appeals to confirm that the commercial housing sales contract is invalid.Order states in gansu province (county) lawyer yan spoke to answer: according to “contract law” article one hundred and twenty-five “the understanding of the terms of the contract the parties disputed, the words, the contract shall, in accordance with the contract, use the relevant provisions, the purpose of the contract, trade practices and the principle of good faith, to determine the true meaning of the clause.”If the name of the contract signed by the two parties does not conform to its nature, the type of contract shall be determined according to its nature.The contract involved in this case, called commercial housing pre-sale contract, is actually loan guarantee.The current law does not prohibit the parties to provide guarantee for loan in the form of sales contract, so the contract involved does not violate the mandatory provisions of laws and regulations.A contract with security function concluded by the parties shall be deemed valid if there is no statutory invalidity.Although the relationship of rights and obligations agreed in the contract does not belong to the typical guarantee type stipulated by the property law, its guarantee function should be affirmed.Failure to confirm the contract involved in the case is invalid, which is not the confirmation of the contract relationship between the two parties, but the recognition that T Company has the priority of compensation for the contract subject matter involved in the case.The contract involved in this case is not a house sale contract in nature, and company C’s request to confirm that the house sale contract is invalid has no legal basis, and in essence, it is absolving itself of guarantee liability, so its request cannot be supported.Lawyer Yan Fu added: “Article 388 of the Civil Code, the establishment of security rights, security contracts should be concluded in accordance with the provisions of this law and other laws.Security contracts include mortgage contracts, pledge contracts and other contracts with security functions.The guarantee contract is the subordinate contract of the principal debt contract.Where the contract of principal creditor’s right or debt is invalid, the security contract shall be invalid, except as otherwise stipulated by law.Article 125 of the Contract Law, where the parties have disputes over the interpretation of a contract term, the true meaning of the term shall be determined in accordance with the words and sentences used in the contract, the relevant terms and conditions of the contract, the purpose of the contract, the transaction practices and the principle of good faith.Where a contract is drawn up in two or more languages and it is agreed that they are equally authentic, the words and sentences used in each language are presumed to have the same meaning.Any discrepancy in the words and sentences used in the different texts shall be interpreted in light of the purpose of the contract.Lawyer Yan Fu, member of the COMMUNIST Party of China (CPC), master degree, member of China Law Society, part-time researcher of Chengxian People’s Procuratorate, author of Introduction to Moot Court Criminal Trial (China University of Political Science and Law Press, 2012), Research on Type Of Trial (Guanzhong, 2020).Second prize of Tianshui Law Forum).