Analysis On The Dispute Of Validity Of Mortgage Guarantee Contract Between Chenzhou Agriculture Bank Of China Suxian Branch And Fengsheng Company

The corporate guarantee behavior is very common legal act in today’s economiclife. The external guarantee behavior is unavoidable in the process of company’sbusiness, and companies signed mortgage-backed agreement to clarify the rights andobligations of the parties to protect the implementation of the contract of guarantee."Company Law of the People’s Republic of China " and the related rules give differentsubjects different level of power like company, shareholders, board of directors,directors, managers and senior management personnel to deicide guarantee;differentiate the guarantee right from whether the articles of association or not toimprove and develop the company’s guarantee system. There is no doubt on itsprogressive significance that "Company Law of the People’s Republic of China"stipulate comprehensively from both the substantive and procedural aspects of thecompany’s guarantee system but there are still some blind spots in the identification ofthe effectiveness of the guarantee contract, which is identified in the aid of otherterms."The Contract Law of People’s Republic of China" article52, paragraph5,meansthat the contract is not valid if it is in violate of mandatory specification. Theeffectiveness of the guarantee contract needs to consider and judge by switching intothese peremptory norms. In accordances with the guidance, promulgated by theSupreme Court in2009, a number issues on the current situation to judge civil andcommercial contracts disputes, peremptory norms will be further classified as: theeffectiveness of mandatory specifications and management of peremptory norms, andthus in accordance with the different types of norms the validity of the contract isdifferent. Therefore in absolute valid guarantee contracts in the existing legalregulation should meet two conditions: First, violation of mandatory legal normsidentified; second the peremptory norms belong to the effectiveness of mandatoryspecifications. Otherwise the guarantee contract which is in violation of peremptorynorms is not null and void, law should find a balance between social, national andpersonal interests and consider the various factors to identify.