Article 22 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Principles of Contract Compilation of the Civil Code of the People's Republic of China (hereinafter referred to as the Interpretation of the General Principles of Contract Compilation of the Civil Code), which came into effect on December 5, 2023, stipulates the issue of "having a person without a chapter", tracing back to its origin. The core of this issue still lies in the issue of official behavior. Official behavior can be divided into the official behavior of the legal representative or the main person in charge, and the official behavior of other staff members, both of which can result in legal consequences of official behavior. There are many theoretical and practical studies on the behavior of job representation, but the behavior of job agency gradually improved with the introduction of the General Principles of Civil Law. What is job agency? What is the difference between job agency, representative, and entrusted agency? Does the contract have effect on the legal person in the case of "someone without seal"? These are common problems encountered in practice, and this article will answer each of these questions one by one.

1、 What is job agency

The so-called job agency refers to the agency of personnel of legal and non legal entities to carry out civil legal acts with third parties within their scope of authority.

The root of the emergence of the job agency system lies in the fact that with the transformation and development of the economy, the scale of economic entities is becoming increasingly large, and the frequency of market transactions is becoming more frequent. It is not realistic for all transaction behaviors to be carried out by the legal representative. Therefore, on the basis of the representative system, the job agency system has emerged. Job agency belongs to commercial agency, and the 1861 German Common Commercial Code directly stipulated the power of job agency (i.e. managerial power).

The General Principles of the Civil Code do not provide for agency of duties, but only Article 43 [1] stipulates the responsibility of corporate legal persons. Article 170 of the General Principles of the Civil Code officially stipulates agency of duties, and the General Principles of the Civil Code (Article 170) continues to use the provisions of the General Principles of the Civil Code on agency of duties.

2、 The difference between job agency, representative, and entrusted agency

The commonality between proxy behavior (Article 170 of the Civil Code) and representative behavior (Article 61 of the Civil Code) is that the legal consequences are borne by the legal person or non legal person organization; The difference between the two is that the behavior of the legal representative in representative behavior belongs to the behavior of the legal person, which also includes factual behavior and infringement behavior, while the behavior of the agent in official agency behavior belongs to itself, and only the legal effect belongs to the legal person or unincorporated organization. [2]

Regarding agency by appointment and agency by commission, some argue that agency by appointment encompasses agency by commission. In fact, Article 170 of the Civil Code is also included in the "agency by commission" section; There are also views that it is difficult to include job agency in the scope of agency by delegation, because in practice, legal persons do not authorize their staff to carry out legal acts separately, and the occurrence of agency by delegation must involve the act of authorization. [3]

3、 The constituent elements and practical recognition of job agency

According to Article 170 of the Civil Code, "Any civil legal act carried out by a person performing the work tasks of a legal person or non legal person organization in the name of the legal person or non legal person organization in relation to matters within their scope of authority shall have effect on the legal person or non legal person organization. The restrictions on the scope of authority of a person performing their work tasks by the legal person or non legal person organization shall not be used against a bona fide counterpart.", Job agency includes four constituent elements:

One is that the agent is a staff member of a legal person or an unincorporated organization. For example, according to the Sichuan Provincial High People's Court (2019) Chuan Min Zai 637 case, Chen Kang purchased cement from Wang Xingfu. After Chen Kang paid in cash, he still owed Wang Xingfu a cement payment of 74840 yuan. Later, Chen Kang issued a debt note of 74840 yuan to Wang Xingfu. Wang Xingfu claimed that Chen Kang was a staff member of Zhongjie Company, and his act of purchasing cement was a dereliction of duty. The Sichuan Provincial High People's Court believes that, based on the facts of this case, Chen Kang is not a staff member of Zhongjie Company, nor is he the legal representative of Zhongjie Company, nor has he been authorized by Zhongjie Company to sign sales contracts with external parties. Chen Kang does not have the authority to represent or act on behalf of Zhongjie Company to sign sales contracts with external parties. His personal act of issuing IOUs to Wang Xingfu was not due to non conformity with the main requirements and was not an official act.

The second is that the agent implements matters within their scope of authority. If the agent's agency behavior exceeds the business scope of the legal person or unincorporated organization, it may constitute apparent agency. For example, according to the case of Qinghai Haidong Intermediate People's Court (2019) Qing 02 Min Zhong No. 260, Feitian Wine Company recognized that it was a job agency relationship with Wang Yunmei, and Wang Yunmei's sale of Baijiu to Bai Jihong in the name of Feitian Wine Company was a job agency behavior. Wang Yunmei went beyond the business scope to supply Bai Jihong with Wuliangye and Wuliangchun Baijiu that Feitian Liquor Co., Ltd. did not obtain a sales license. However, Wang Yunmei provided Bai Jihong with the attached list of Feitian Liquor Co., Ltd., and Bai Jihong had reason to believe that Wang Yunmei was selling Baijiu on behalf of Feitian Liquor Co., Ltd. Therefore, Wang Yunmei's act of supplying Baijiu to Bai Jihong constitutes apparent agency.

Thirdly, the agent must carry out the act of proxy in the name of a legal person or an unincorporated organization. For example, according to the Supreme People's Court's (2020) Supreme People's Court case No. 6360, the signature of the "borrower" at the head and end of the loan contract involved is Zhang Pengxi, and the Huixian Rural Commercial Bank is not listed as a borrower. The seal of the "Huixian Rural Commercial Bank Enterprise Customer Management Department" at the head of the contract is an internal institutional seal of the bank, which cannot replace the official seal of Huixian Rural Commercial Bank and has no binding effect on Huixian Rural Commercial Bank. Moreover, it has been determined by an effective criminal judgment, The seal was forged by Zhang Pengxi. Therefore, Zhang Pengxi did not sign the loan contract in the name of Huixian Rural Commercial Bank but in his own name, and it does not constitute a proxy for his position.

The fourth is that the relative party is in good faith, that is, the relative party is not aware and should not be aware of the limitations on the scope of authority of the legal person or non legal person organization for personnel performing their work tasks.

4、 Does it constitute the boundary of job agency: can a contract with only the signature of a staff member and without the official seal of the legal representative have its validity extended to the legal representative?

According to Article 41 of the "Minutes of the National Conference on Civil and Commercial Trial Work of Courts" and Article 22 of the "Interpretation of the General Principles of Contract Compilation of the Civil Code", there are mainly three types of abnormal person seal relationships: "real person false seal", "someone without seal", and "someone with seal but no seal". Among them, the issue of "someone without a seal" is closely related to job agency.

According to Article 22, Paragraph 2 of the Interpretation of the General Principles of Contract Compilation of the Civil Code, If a contract is entered into in the name of a legal person or non legal person organization, but only has the signature or fingerprint of the legal representative, person in charge, or staff member without the seal of the legal person or non legal person organization, and the counterpart can prove that the legal representative, person in charge, or staff member did not exceed their authority at the time of signing the contract, the people's court shall determine that the contract is effective for the legal person or non legal person organization. However, unless the parties agree that affixing a seal is a condition for the formation of the contract Based on this, the core requirement for the effectiveness of a contract to extend to a legal entity in the case of "someone without a seal" is that the legal representative, person in charge, or staff member enters into the contract within their authority, and the burden of proof is borne by the counterparty.

The Interpretation of the General Principles of Contract Compilation of the Civil Code was released on December 4, 2023 and implemented the following day. Previously, judicial practice has also determined that many opinions are consistent with this provision. Taking the Supreme People's Court (2019) Supreme People's Court Case No. 277 as an example, in this case, Gansu Second Construction Group Co., Ltd. (hereinafter referred to as "Second Construction Company") signed a cooperation agreement with Wuwei Jinmanyuan Agricultural Technology Development Co., Ltd. (hereinafter referred to as "Jinmanyuan Company") and Gansu Wuwei Industrial Park Management Committee (hereinafter referred to as "Industrial Park Management Committee"), with the Industrial Park Management Committee as the supervisory party. Wang Shengbiao is the Minister of Investment Promotion Department of the Industrial Park Management Committee. He signed the Cooperation Agreement on behalf of the Industrial Park Management Committee, but the agreement was not stamped with the seal of the Industrial Park Management Committee. The Supreme People's Court believes that Wang Shengbiao is not the legal representative and has no right to directly sign contracts on behalf of the Industrial Park Management Committee. He also did not receive recognition from the Industrial Park Management Committee afterwards. Therefore, the Cooperation Agreement is not binding on the Industrial Park Management Committee, and Wang Shengbiao's signing behavior does not constitute an act of duty.

5、 Conclusion

The definition of whether it constitutes agency of duties essentially lies in finding a balance between protecting the interests of the contracting party and protecting the interests of the legal person. In the case of "someone without a seal", this balance depends on whether the legal representative, person in charge, or staff member has entered into a contract within their scope of authority, and whether the counterpart can provide sufficient evidence to prove it. If the counterpart is unable to provide evidence, the effectiveness of the relevant civil legal act is not as good as that of the legal person.

References and comments (slide down to view)

[1] Article 43 of the General Principles of Civil Law stipulates that "an enterprise legal person shall bear civil liability for the business activities of its legal representative and other staff members."
[2] See Shi Shangkuan: General Theory of Civil Law, published by China University of Political Science and Law Press in 2000, page 475.
[3] Refer to "Understanding and Application of the General Principles of the Civil Code of the People's Republic of China" edited by the Leading Group for the Implementation of the Civil Code of the Supreme People's Court, People's Court Press, 2020 edition, pages 848-849.