In The Equity Transfer Of Company Assets Quality Of The Liability For Guaranteeing The Drawbacks

During the operating process of limited liability company, the phenomenon of transfer the possession of equity is not rare, after the transferring of equity, there is always a common phenomenon that the company will not operate smoothly which shall be ascribed to the critical property quality defect.Hence new shareholders sue to the court for rescinding or dissolving the contract of transferring equity due to the following reasons: original shareholders’ concealing property quality defect of the company which in other words is a fraudulent conduct, the wrongful act further contributes to new shareholders’ misunderstanding, all mentioned above promotes the failed achievement of the contract’s purpose, while shareholders’ claims hardly upheld.There is little relevant provision in corporation law and specificity lies in the equity transfer contract, it is a little bit inappropriate to apply corporation law directly, therefore, here comes the consequence which is fairly unconscionable that there is no appropriate provision shall be applied for protection of new shareholders’ interests.Thesis is to extract a warrant liability system of property quality defect from responsibility for warranty of defect prescribed in contract law, during equity transfer process.The first chapter commences with four classical cases from which the following legal problems suppose to be analyzed: the typical models of company property defect, the relationship between the company property and the performance of equity contract, evidence that the parties utilized to advocate their rights as well as the focus of dispute in four cases as well as courts’ thinking way of decision. Furthermore, conjunct matters shall be concluded and the responsibility for warranty defect during the process of equity transfer is essential.Eventually, a conclusion was supposed to be drawn that the violation of transferee’s right contributed to its lack of due diligence. there are four matters be figured out: firstly, relationship between the statement of company’s property and the content of equity transfer contract. secondly, extension of information transferor is expected to reveal. thirdly, transferee’s extension of prudent duty. last but not the least, composition elements of company’s warranting liability for the defects of property.The second chapter, first of all, drawing relative regulations that shall be applied in equity transfer contract from relevant provisions, comparing the difference between the liability for guaranteeing the drawbacks of general contracts and defect warranty liability of equity transference to sort out the latter’s specificity and analyze the similarities and differences between them.The third chapter, the first section is in according with four cases referred in chapter one in order to definite the conception of defect, which shall beDivided into critical defect and other defect. In the second section, according to cases and external relative stipulations, a conclusion would be drawn about what applicable extension the warranty obligation of property defect would be, during the trade of equity transferring. In the third section, definition of constitutive elements about warranty obligation would be done, first of all, the contract of equity transferring shall be classified into two kinds respectively as 10% and 50%,then respectively what extensive information of two kinds of contracts shall be defined, without revealing comes critical defects; furthermore, statute of limitation of warranty responsibility of defect shall also be defined; in the end, ways to undertake is still supposed to be defined, such as negotiation,continuing to perform,decreasing amount,terminating the contract and compensating relevant damages. Company’s warranty obligation of property defect defined in this chapter is indeed the peroration of thesis.