The Components Of Representative By Estoppel

The legal representative rules of China now is that one legal person only has one legal representative,who acts on behalf of the legal person and the effect will directly attributable to the legal person.The authority of the legal representative is limited by the law,the articles of association,and internal resolutions.However,as an outsider,it is often difficult for a third party to know the actual authority of legal representative.In order to protect the reliance of the third party,Article 50 of the Contract Law sets up the rules of representative by estoppel.When the ultra vires of legal representative exists in entering into a contract,the legal person shall be liable to the bona fide third party.Representative by estoppel is an important reliance protection rules,which has great practical significance for the security and conduct of trading activities.Therefore,it is necessary to clearly identify the component of representative by estoppel and their specific criteria,so that the problem of the validity of the legal representative's ultra vires behavior can be effectively solved.Through the literature analysis method,this paper analyzes the concepts and forms of the component of representative by estoppel.This paper also compares the different doctrines on component of representative by estoppel,in order to draw scientific conclusions that when representative by estoppel is applicable.Moreover,the paper analyzes the criteria of each component in specific judgments,in order to solve judicial practice problems.The structure of this paper is mainly divided into the following parts:The first part mainly introduces the objective components of representative by estoppel,which include the ultra vires behavior of the representative and the existence of “right appearance”.The ultra vires behavior includes both the behavior beyond the law enforcement,the company's articles of association and internal resolutions.There is controversy in the academic community as to whether the behavior beyond the scope of business should be an ultra vires behavior in the sense of Article 50 of the Contract Law.Based on the value considerations of the development of economic market,it should be included in the application of representative by estoppel.The question of the validity of the legal representative's ultra vires of external guarantees shall not be directly determined by the nature of Article 16 of the Company Law.Rather,it should start with the relationship between Article 50 of the Contract Law and Article 61 of the General Principles of the Civil Law to analyze whether representative by estoppel can be applicable.The appearance of rights is the basis for third party's reliance.It is contrary to the fact.Usually,multiple appearance of rights interacts each other,which ultimately forms the appearance that eh representative has the right.The forms of right appearance are mainly registration and announcement,certificate documents and official seals.The second part mainly introduces the subjective components of representative by estoppel including the reasonable reliance of the third party,the bona fide third party and the accountability of the legal person being represented.Reliance is a subjective psychology,so there must be some external manifestation to prove the existence of reliance.The judgment of reliance must start from both objective and subjective aspects.The subjective judgment generally adopts the standard of the rational person,but since the individual's judgment ability is affected by the knowledge and experience,it can be slightly adjusted according to the individual case in the practice.The relative person cannot have reasonable reliance if the appearance of violates the law.In terms of bona fide thirty party,the understanding of “bona fide” shall adopt "negative conception" theory,that is,"a person doesn't know and should not know." In the relationship between “bona fide” and no fault,“bona fide” should of course contain no fault.As for the application of representative by estoppel,the request of the third party is no major fault.The testimony of bona fide third party should adopt presumption,and it is the legal person's responsibility to prove that the third party is not bona fide.In terms of the accountability of the legal person,the “new double component” theory of agency by estoppel believes that the person being agented should be accountable.The representative by estoppel who has the similar purpose as agency by estoppel should also require the legal person to be accountable.The principle of accountability should adopt the risk principle.The legal party is only responsible for the consequences caused by factors within the scope of its risk.The third part puts forward suggestions for the improvement of China's representative by estoppel rules.First of all,the scope of the people that is applicable to representative by estoppel in our country is too narrow,only limited to the legal representative and the person in charge.It is possible to refer to Japan's rules to appropriately broaden the scope of application of subject from legal representatives to legal representatives,directors,senior executives.Second,it is necessary to improve the specific situation of “ultra vires”.The statutory restrictions and intentional restrictions on representatives should also be clearly clarified in the law.For behaviors beyond the general business scope,the representative by estoppel rules can also be applied.