On The Termination Of The Equity Transfer Contract By Installment Payment

The supreme people's court's guiding case no.67 has established that the termination of the equity transfer contract of installment payment is not applicable to the termination rule stipulated in article 167 of the Contract Law.The reason for the judgment not only limits the scope of application of article 167 of the Contract Law to the consumption contract,but also confuses the right of rescission of the installment sales contract stipulated in article 167 of the Contract Law with the legal rescission right stipulated in article 94 of the Contract Law.The constitutive elements of the installment sale are: the installment payment of the price,the subject matter shall be delivered to the buyer,and the delivery shall enable the buyer to obtain direct possession.The above characteristics of the installment sales contract make the seller face the risk that the price cannot be recovered in the installment sales.Betray a person to protect his interest to often be in the agreement in contract of instalment business is helpful for oneself clause,in order to restrict betray a person optional agreement removes authority clause,the setting that instalment business contract removes a rule turns to protect consumer gradually,"contract law" the function fixed position of article 167 protects consumer interest namely.It is the value standpoint of article 167 of the Contract Law that makes article 167 of the Contract Law independent of article 94 of the Contract Law."Contract law" 167 at the beginning of the establishment of the chattel as a model to design,"contract law" 167 article 2 provisions,the assignee to terminate the contract can be asked to pay the assignee the use fee of the subject matter.The subject matter royalty shall be paid only if the transferee has direct possession and use of the subject matter.This clause proves that the subject matter regulated in article 167 of the Contract Law must be in the direct possession and use of the assignee.The essence of equity is right,and equity always exists in the target company in the process of transfer,and the transferee cannot use it without directly owning equity.In this regard,it is difficult to apply the provisions of article 167 of the Contract Law to the termination of the equity transfer contract of installment payment.From the perspective of judicial practice,the rescission of the equity transfer contract of installment payment is rarely applicable to the rescission rule stipulated in article 167 of the Contract Law.Article 167 of the Contract Law is not applicable to the installment equity transfer contract.How to find the legal basis for the termination of the installment equity transfer contract should start from the particularity of the termination of the installment equity transfer contract.The particularity of the termination of the equity transfer contract of installment payment is shown in the following three aspects:Firstly,the termination of the installment equity transfer contract shall be classified into equity transfer stages.The process of equity transfer includes three stages: the equity transfer contract is established and comes into force,but the list of shareholders has not been changed;the list of shareholders has been changed but the business registration has not been changed;and the business registration has been changed.Different stages of equity transfer have different impacts on the interests of the company and the third party.Therefore,the termination of the installment equity transfer contract must be determined according to different stages of equity transfer.Secondly,the installment equity transfer contract to remove by equity status attached restrictions.In the installment equity transfer contract,once the assignee delay to pay the price,if allowed to assignor to cancel the contract,the combined personal dependent relationship will be destroyed,the receiving party based on the original shareholder status in company decisions are likely to lose legal basis,so as to have a significant impact on a company's management.Thirdly,the termination of the equity transfer contract of installment payment shall consider the risks faced by the transferor.The special way of equity delivery weakens the risk that the transferor faces the price can not be recovered,which determines that the termination of the equity transfer contract of installment payment cannot simply refer to the general rules for the termination of the installment purchase and sale contract.In any instalment equity transfer has particularity,the termination of the contract according to the supreme people's court about buying and selling contract dispute case applicable law question the interpretation of the provisions of article 45,the provisions of article 124 of the Contract Law and the provisions of article 174 of the,installment lift the equity transfer contract shall be governed by the provisions of "contract law" the general,and with reference to the relevant provisions governing sales contracts.Under the current legal framework,the termination of the equity transfer contract of installment payment should be based on article 93 and article 94 of the Contract Law.Specifically,in the first stage of the equity transfer,due to not for shareholders to change and change in industrial and commercial registration,payment by installments equity transfer contract the assigning party remove contract is difficult to substantial effects on the interests of company,the third person,so the shareholders did not change the payment by installment of "contract law" provisions shall be applicable to the equity transfer contract termination right specification.In the second phase of the equity transfer,due to the register of shareholders have change,installment equity transfer will termination of the contract involves the interests of the company,so the shareholders have been changed the installment payment of equity transfer contract terminates when is the right of rescission specification of "contract law" provisions shall be applicable,but in paragraph 3 of article 94 of the Contract Law provisions on legal termination should be for the purpose of interpretation.In the third stage of equity transfer,since the industrial and commercial registration has been changed,the termination of the contract at this time will not only involve the interests of the company,but also involve the interests of a third party.Therefore,the installment payment equity transfer contract that has completed the registration of industrial and commercial change is not applicable to the cancellation right specification stipulated in the Contract law.Although the exercise of the right of rescission is excluded when it has a significant impact on the interests of the company,other remedies for breach of contract can also cover the losses suffered by the non-breaching party.