Identification and review of financing sales contracts between enterprises

2022-05-22 0 By

In June 2014, Company A and Company B signed the contract of sale of goods. Both parties agreed that Company A would pay for goods to Company B, and Company B would provide goods to Company A.In the same month, company B and Company C signed a contract for the sale of goods, in which company B paid for goods to company C and company C provided goods to company B.The goods sales contracts signed by company B and Company A and Company B are identical or similar in terms of variety, quantity, price, etc.Similarly, companies C and A have also signed a similar contract for the sale of goods.After the contract comes into force, due to poor operation and broken capital chain, COMPANY C is unable to supply goods to Company B as agreed or return the payment for goods paid, which leads to company B’s inability to perform its contractual obligations to Company A.Therefore, company A sued company B to the court, asking company B to return the money and compensate for the loss.B company reply, according to the sign is the contract of buying and selling of goods, but in fact borrowing funds is the relationship between the parties, because never actual delivery of goods under the contract, it is only as the Posting will lend money to pay keep party of party a, therefore, a company the real transaction object is c company, b company does not assume responsibility.After the trial, the court of first instance rejected company A’s lawsuit request for company B to return the payment and compensate for the loss, and the court of second instance and retrial both upheld the judgment.Company A then applied to the procuratorial organ for supervision.This case is a typical civil and commercial dispute case with circular trade characteristics. Due to the rights and obligations of the three parties involved and the amount of the object of dispute is large, a correct analysis of the legal relationship between the parties has important reference value for handling such cases. There are two different opinions.The first opinion holds that company A, Company B and Company C constitute an independent sales contract relationship and are not related to each other.Where there is a written contract for the sale of goods and it does not violate mandatory provisions of law, it shall be presumed to be the true expression of intention of the parties.If Company B fails to deliver the goods on schedule as stipulated in the sales contract between Company A and Company B, it shall be liable for breach of contract.The second opinion holds that the legal relationship involved in the case should be the enterprise loan dispute and the sales contract relationship is invalid.In the form of this case, it is the contractual relationship of sale, but in essence, it is the arrangement of financing transactions between enterprises. Company A is the lender of funds, Company C is the user of funds, and Company B is the lending relationship between company A and Company C as the channel of funds.I agree with the second opinion.The reasons are as follows: First of all, according to article 146 of the General Principles of civil Law (the same as the Civil Code), the civil legal act performed by the doer and counterpart with false intention is invalid.The effectiveness of a hidden civil juristic act manifested by false intention shall be dealt with in accordance with the relevant law.The financing sales contract signed between enterprises “named sale, but actually lending” is invalid because the sales relationship is used to cover up the real intention of capital lending.However, lending acts are generally regarded as valid when they conform to the provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Folk Lending Cases “the folk lending contracts concluded between legal persons, non-legal organizations and each other for production and business needs”.On the contrary, if the lending behavior violates the mandatory provisions of laws and regulations, it is considered invalid. For example, article 19 of the Banking Supervision Law stipulates that “no unit or individual may establish a banking financial institution or engage in business activities of a banking financial institution without the approval of the Banking supervision institution of The State Council”.The above provisions provide the basic legal basis for the handling of such cases.Secondly, the falsity of the contract of sale of goods between the parties in the case is mainly reflected in the following four aspects.First, from the content of the contract, the sales contract signed by company A, Company B and Company C was signed at a similar time, and the type and quantity of goods agreed in the contract were the same.By reviewing all sales contracts as a whole, it can be found that the initial buyer and the final seller of goods are all company A, and the agreement on goods circulation in the sales contract forms a closed loop.Second, from the perspective of the performance of the contract, only the capital flow turns to the delivery of goods without reality.On the one hand, company B and COMPANY C never actually delivered the goods;On the other hand, after the payment in question is delivered to Company B by Company A, Company B shall transfer the same amount to Company C on the day or several days after receiving the payment.Third, there are situations that go against common sense and business logic.If the relevant sales contract stipulates that after c company sells the goods to B Company, B Company sells the goods to A company at a lower price, for B company, there is “buying at a higher price and selling at a lower price”, which is not in line with the business purpose of the commercial subject to earn price differences through sales.In addition, if Company A issued the receipt certificate without receiving the goods, it is also obviously contrary to the facts.Fourthly, the correspondence of entrusting receipt and payment shows that Company B is entrusted by both parties of Company A and Company C to deliver the money prepaid by Company A to Company C and return the repayment of company C to Company A.Therefore, the real legal relationship of the case should be the loan relationship.Thirdly, even if the existing evidence is sufficient to determine that the case is actually a corporate loan dispute, in which Company A is the lender of funds and Company C is the user of funds, this does not mean that Company B, as the channel of funds, does not have to bear any legal liabilities.Therefore, although B company does not have to perform the obligations under the goods sale contract, it may still bear the responsibility of the capital channel in the corporate loan relationship.In practice, the legal liability of the fund channel party should be determined according to its subjective understanding and effect.For example, objective evidence shows that the capital channel party actively participates in the design and implementation of inter-enterprise circular trade structure, so it should be presumed to be knowingly at fault, so it constitutes debt entry and should bear joint and several liability.Another example is that the expected income of the capital channel party (intermediary fees, etc.) is far lower than the debts agreed in the contract. Based on the principle of the consistency of rights and responsibilities, it should be identified as a performance assistant.For another example, company A was worried that the funds lent to Company C could not be recovered as scheduled, so it found Company B as a guarantee for the loan of funds, and Company B happened to have the need to improve business performance, so both parties signed a separate written guarantee contract.In this case, the capital lender will lend the capital just because of the credit enhancing role played by the channel party in the enterprise’s lending relationship, and the fund channel party shall bear the corresponding guarantee responsibility.Results: Finally, the procuratorial organ made a decision not to support the application for supervision according to law.With the changes of macroeconomic situation and business environment in recent years, disputes over financing sales contracts have appeared frequently in judicial adjudication.When handling such cases, judicial authorities should conduct a comprehensive investigation to verify the facts of the case, accurately identify the true intentions of the parties, clarify legal relations and ensure the fairness and impartiality of the trial results.(The authors are Shanghai Hongkou District People’s Procuratorate and Shanghai Shanghai People’s Procuratorate respectively)