Article 5: Where a third party commits acts of fraud or coercion, causing the parties to conclude a contract contrary to their true intentions, and the party that suffers losses requests that the third party bear liability for compensation, the people's courts are to support it in accordance with law; Where parties also have conduct that violates the principle of good faith, the people's courts shall determine the corresponding responsibility based on their respective faults. However, where laws and judicial interpretations have other provisions on the civil liability of parties and third parties, follow those provisions.
【Purpose of the Article】
This article is about a third party committing fraud or coercion, causing the parties to conclude a contract contrary to their true intentions, and the party who has suffered losses requests the third party to bear the liability for compensation.
【Overview of Provisions】
Articles 149 and 150 of the Civil Code respectively stipulate the validity of contracts in the case of third-party fraud and third-party coercion, but do not explicitly stipulate the liability of third parties. According to article 157 of the Civil Code, the third party shall also be liable for compensation to the party who suffers losses as a result. In the above case, if the parties are also at fault, each party shall bear the corresponding liability according to the degree of fault. The purpose of this article is to clarify the liability of third parties, and the scope of compensation for third parties shall be determined according to the circumstances of the specific case, combined with the principle of good faith, liability for contractual negligence, and other provisions. It should be noted that the existing judicial interpretations have clear provisions on the responsibilities of guarantors and accountants, and in order to avoid conflicts between judicial interpretations, the special provisions shall be applied in priority if there are other special provisions in the laws and judicial interpretations.
【Controversial Views】
If a third party commits fraud or coercion, causing the parties to conclude a contract contrary to their true intentions, can the party who has suffered losses request the third party to bear the liability for compensation? What is the legal basis and scope of compensation for a party to request a third party to bear the liability for compensation? Can we learn from the reliance standard in the determination of liability for third-party contractual negligence in the German Civil Code?
[Understanding and Application]
1. The main controversy concerning the liability of third parties in the conclusion of the contract
Articles 149 and 150 of the Civil Code stipulate the validity of contracts in the event of fraud or coercion by a third party. However, there is no clear provision on whether the party who has suffered losses can claim compensation from a third party who committed fraud or coercion. In practice, there have been cases in which the parties have raised corresponding claims on this issue, and the adjudication standards have been grasped differently in different localities, so the judicial interpretation should be stipulated, and a consensus has basically been formed. The reason is that, based on the provisions of articles 149 and 150 of the Civil Code, the party who has suffered losses may claim compensation from a third party. If the third party that meets the above conditions is not directly liable, then the parties to the treaty will face the dilemma of lack of remedies and excessive litigation burden. First, the creditor cannot rely on tort liability as the basis for the claim. Because the scope of tort liability in the Civil Code is limited to ordinary relationships, and according to the specific rights enumerated in the provisions, such trust interests of the contracting parties are not protected by the relevant provisions on tort liability. However, if a third party intervenes in the process of concluding a contract, it has already established a legal connection with the contracting parties, and it shall perform its duty of protection in accordance with the principle of good faith. Therefore, there is insufficient basis for the contracting parties to claim tort liability. Second, in the case of liability for breach of contract as the basis of the claim, the remedies for the rights of the contracting parties are incomplete. If a third party signs a relevant contract with a contracting party, the contracting party may claim rights through the contract, but the third party only signs a contract with the other contracting party, and the difficulty arises. Although theoretically, there is a possibility that the injured party can exercise the right of subrogation if the party to the contract with a third party neglects to exercise its rights against the third party, the exercise of subrogation has the problems of inefficiency, incomplete remedies, and even waste of judicial resources and increase the cost of creditor litigation.
As to the legal basis that a party who has suffered losses can claim compensation from a third party, the majority opinion believes that it can be determined that the third party can be held liable for contractual negligence. The practice of assuming liability for contractual fault by a third party, which has long been developed in German law from jurisprudence, has been formally incorporated into the German Civil Code with the help of the revision of the new debt law, which has great reference significance for our research and formulation of relevant provisions.
Sections 241 (2) and 311 (2) and 311 (2) and 3 of the German Civil Code regulate liability for contractual negligence of third parties. Article 241, paragraph 2, states: "A debt relationship may by its content obligate either party to an obligation to take into account the rights, legal interests and interests of the other party. Article 311, paragraph 2, states: "A debt relationship consisting of obligations under article 241, paragraph 2, also arises as a result of one of the following circumstances: 1. The commencement of contractual negotiations. 2. Preparation of the contract, and in the preparation of the contract, in view of the possible legal act relationship, one party will give to the other party the possibility of affecting its own rights, legal interests and interests; or entrust their rights, legal interests and interests to another party. 3. Transaction-like contact. Paragraph 3 of the same article provides that: "A debt relationship that is subject to the obligations set forth in article 241, paragraph 2, may also arise against a person to whom he should not be a party to the contract." This is especially the case when the third party specifically claims reliance on itself and thus significantly affects the negotiation or conclusion of the contract. Some scholars believe that this breaks through the traditional view that liability for contractual fault should only arise between persons who will become parties to the contract, and becomes the basis for the third party to bear liability for contractual negligence, and is also a breakthrough in the principle of relativity of debt relations. In fact, the provision of this paragraph is (or even merely a confirmation of the system of liability of third parties for contractual negligence, which has developed over the course of a long period of jurisprudence). And as the official explanation of the Federal Government states, "it is precisely in the area of contractual fault liability that the development is not yet over".
(1) Whether there is a conflict between the liability of a third party for contractual negligence and the principle of relativity of debt
During the drafting and discussion of this judicial interpretation, the majority opinion held that the liability of a third party for negligence in contracting does not violate the principle of relativity of debts. After the contract is invalid or revoked, the mutual rights and obligations of the two parties to the original contract are not based on the contract, but on the protection of trust interests by the law based on the principle of good faith in civil activities. Similarly, the third party should also follow the principle of good faith in the process of concluding the contract. If one party is deceived or coerced by a third party, resulting in the rescission of the contract, and the third party damages the trust interests of the contracting party, violates the principle of good faith that should be observed, and is denied by the law, then the third party and the party to the contract also have a creditor-debtor relationship, and the third party becomes the debtor. This relationship of rights and obligations does not violate the principle of relativity of debt, but follows the principle of relativity of debt.
(2) Whether the concept of "third party" is specific
Some scholars believe that although the expression "third party" is used in the German Civil Code, there is no unified concept of "third party", but because the system of third party liability for contractual negligence has been developed through precedents, which refers to the three situations generally recognized by precedents and academics, namely, the liability of agents and negotiation assistants, the liability of administrators and the liability of prospectuses...... The third party is not an arbitrary third party, it is always used by one of the parties to the contract, so as to directly or indirectly have a relationship with the counterparty of the contract and affect the negotiation and conclusion of the contract. Therefore, the third party does not have an independent position in the contract negotiation in which it participates, and it is dependent on the contractual relationship between the potential parties to the contract. However, we believe that the theory of liability for the negligence of third parties is itself evolving, and the expression of the German Civil Code does not limit the third party to the three types of situations in which there are many cases in the past, leaving room for maneuver for subsequent theoretical development and practical grasp, and the concept of third party is not restricted in the Mainland Civil Code, so this judicial interpretation does not make special provisions on the scope of third parties.
(iii) The standard of reliance in the German Civil Code
Although the German Civil Code only stipulates the standard of reliance as a special case in terms of expression, and does not exclude other criteria (such as the standard of self-interest), some scholars believe that the standard of reliance should be applied to the liability of third parties for contractual negligence. First of all, this criterion is consistent with the nature of contractual negligence liability, which is between contractual liability and tort liability. Since the tort law can only remedy the infringement of the owner's existing property by the wrongful act and cannot protect the interests paid by one party in the contract due to trust, and the contractual liability is difficult to apply because there is no effective contract at the stage of contracting, the statutory pre-contractual debt relationship is established. On the one hand, the legality of this debt relationship shows the absoluteness of a series of obligations, thus providing the possibility for a third party to be included in the scope of the obligor. On the other hand, liability for contractual negligence applies only to the pre-contractual field, and the relative condition is also made possible by the participation of a third party in the conclusion of the contract. The third party independently establishes the above-mentioned statutory debt relationship between itself and the counterparty through its own key acts, and the counterparty relies on the third party rather than the other party to the contract. Secondly, this approach also highlights the important purpose of the trust protection of contractual negligence liability, because the trust relationship arising through the conclusion of the contract is the premise for the parties to impose a series of protection obligations, and from the perspective of protecting the reasonable trust of the counterparty, there is no essential difference between whether such trust is caused by the other party itself or by a third party through direct participation in the negotiation or indirect influence of the consultation. Compared with the other party, the third party has established a relationship of trust with the counterparty through some of its key acts (such as "guaranteeing" in its own name, presenting appraisal certificates, etc.), and the counterparty also exposes its legal interests to the danger of infringement by the third party based on such trust, so there is no reason for the counterparty to become a victim of the third party's negligence or carelessness. In the draft judicial interpretation, it was proposed to include a special paragraph to provide that: "Where the conclusion of a contract is based on special trust in a third party or a high degree of dependence on the knowledge, experience, information, etc., provided by a third party, and the third party commits an act that violates the principle of good faith or is at fault for the non-establishment, invalidity, revocation or determination of the invalidity of the contract, and the party who has suffered losses requests that the third party bear the liability for compensation, the people's court shall support it." In the course of the discussion, considering that this part of the theoretical discussion is still inconclusive, and that the grasp of the standard of reliance, especially the determination of "special trust", in judicial practice, is a thorny issue, and that the general trust that the counterparty could have expected cannot be elevated to a special trust, otherwise it will violate the original intention of using the auxiliary person in the transaction precisely because of its special talents, and it will also enable the counterparty to avoid the commercial risks that it should have borne due to its credulity.
(4) Burden of proof
Generally speaking, a third party is liable for damage only if it knew or ought to have known that its conduct would cause damage to the contracting party. It would be unfair to hold a third party liable if it did not foresee and should not have foreseen that its conduct would cause the contracting party to mistrust or cause undue damage to the contracting party. With regard to the burden of proof of the fault of the third party, some scholars believe that the principle of presumption of fault should be adopted, believing that this can protect the legitimate interests of the contracting parties in the conclusion of the contract and enable the third party to consciously perform the duty of good faith. [7] We believe that, on the one hand, the principle of presumption of fault should be regulated by law; On the other hand, the principle of attribution of liability for contractual negligence is the principle of general fault liability, and if the burden of proof on the third party is heavier than that of the contracting party, it would be unfair to the third party. Therefore, in terms of the burden of proof, it is up to the Party that has suffered the loss to prove that the third party has committed fraud or coercion.
II. Determination of Fraud
Prior to the promulgation of the General Provisions of the Civil Law, the laws and administrative regulations of the mainland did not separately provide for the validity of civil juristic acts fraudulently committed by third parties. Article 40 of the Judicial Interpretation of the Guarantee Law stipulates that "if the debtor of the main contract uses fraud, coercion or other means to cause the guarantor to provide a guarantee contrary to its true intentions, the creditor knows or should know the fact of fraud or coercion", and the guarantor shall not bear civil liability. Article 149 of the General Provisions of the Civil Law fills this legislative loophole by stipulating that: "Where a third party commits a fraudulent act, causing one party to carry out a civil juristic act contrary to its true intentions, and the other party knows or should know about the fraudulent act, the defrauded party has the right to request the people's court or arbitration institution to revoke it." "The Civil Code continues the above provisions of the General Provisions of the Civil Law.
The constitutive elements of third-party fraud are: first, it should be a third party other than the parties who commits the fraud. If the person committing the fraud is a party or an agent, the provisions of Article 148 of the Civil Code shall apply. Second, the defrauded party falls into a misunderstanding based on the fraudulent act carried out by a third party and takes a legal act contrary to its true intention. Similar to the constitutive elements of fraud, there must be a causal relationship between the fraud of a third party and the civil juristic act of the defrauded party. In other words, if the third party does not commit fraud, the defrauded party will not fall into a misjudgment and make the corresponding civil juristic acts. Finally, the counterparty knew or should have known that the civil juristic act of one party was based on the fraudulent act committed by the third party. This element is an important criterion to be established in order to balance the interests of the parties. In the context of modern commercial society, ensuring the security of transactions has increasingly become a core legal value. Since the exercise of the right of revocation by the defrauded party will have a significant impact on the rights of the counterparty, in order to achieve a balance of interests and prevent moral hazard, third-party fraud is limited by whether the counterparty is bona fide and not negligent. The counterparty should have known, i.e., the counterparty should have known, also known as negligence and ignorance, on the premise that the counterparty should have known or would have known about the third party's fraud. If the counterparty should have known, it is sufficient to deny its legitimate and reasonable reliance on the validity of the contract.
III. Determination of Coercion
Article 58, Paragraph 1, Item 3 of the General Principles of the Civil Law stipulates that "a civil juristic act committed by one party by means of fraud, coercion or taking advantage of the danger of another party to cause the other party to act contrary to its true intentions" shall be invalid. Article 52, paragraph 1 stipulates that a contract in which "one party concludes a contract by means of fraud or coercion, harming the interests of the state", while article 54, paragraph 2 stipulates that "if one party concludes a contract contrary to its true intention by means of fraud or coercion or taking advantage of the danger of others, the injured party has the right to request the people's court or arbitration institution to modify or revoke the contract." On this basis, Article 150 of the General Provisions of the Civil Law no longer distinguishes between the state and ordinary civil subjects who are the targets of coercion, reflecting the principle that "all civil subjects have equal legal status in civil activities". At the same time, Article 150 of the General Provisions of the Civil Law stipulates coercion and coercion by a third party in terms of the subject of the act, and uniformly stipulates that "if one party or a third party uses coercion to cause the other party to carry out a civil juristic act contrary to its true intentions, the coerced party has the right to request the people's court or arbitration institution to revoke it." This article continues the above-mentioned provisions of the General Provisions of the Civil Law.
According to the general theory, coercion refers to the act of forcing the other party to fear and thus act contrary to the true intention of the other party by threatening to cause damage that will occur or to directly inflict harm. Article 22 of the Judicial Interpretation of the General Provisions of the Civil Code stipulates the criteria for determining coercion, that is, where a natural person or his close relatives are compelled to express their intent based on fear by causing damage to the personal rights, property rights and other lawful rights and interests of natural persons and their close relatives, or by causing damage to the reputation, honor, or property rights and interests of legal persons or unincorporated organizations, the people's court may determine that the coercion is coerced as provided for in article 150 of the Civil Code. It is generally accepted that coercion can be constituted as long as it can cause the coerced person to reach a level of fear, and there is no need to consider whether the harm caused by the coercive act is significant.
Coercion and fraud are both revocable causes of legal acts under the law, because the free will of the perpetrator is unduly interfered with by others, resulting in defects in the validity of his expression of will. However, due to the fact that coercion oppresses the free will of the parties more severely and has a deeper impact on the untruthfulness of the expression of intent, the law makes different provisions on the constituent elements and legal effects of the two, as well as the fraud and coercion committed by a third party.
The constitutive elements of third-party coercion are: first, the subject of third-party coercion is a third party other than the parties. Secondly, coercion is the act of giving notice of future damage to the other party and claiming that he has the ability to cause the damage to occur. Coercive acts include the following two situations: first, the threat of imminent harm; The second is that the coercion threatens to face harm directly. It is important to note that the damage that occurs in the future must be something that the coerced person can believe will happen and be sufficient to terrify the coerced person. Coercion does not constitute coercion if the threat that a party is going to cause harm is unfounded, or if the coerced person simply believes that it will occur. According to the criteria for determining coercion as stipulated in Article 22 of the Judicial Interpretation of the General Provisions of the Civil Code, direct or future damages may be directed at the parties themselves or to the close relatives of the parties. As long as the threat of causing damage to life, body, health, reputation, honor, privacy, or property is threatened, it can constitute an act of coercion. Finally, the coercive person should have the intent to coerce when committing the coercive act. Coercive acts are carried out intentionally and negligence does not constitute coercion. The intention of coercion should be constituted by two meanings: the intention to cause fear in the coerced person; The intention of causing the coerced person to express his or her intention based on the fear.
Coercion is unlawful. Coercion is the imposition of coercion and threat on the other party, which must be illegal and without legal basis. In other words, if one of the parties or a third party exerts legal or reasonable pressure on the expressor, it does not constitute coercion. If one party to the contract refuses to perform its obligations under the contract, and the other party uses a lawsuit as a means to urge it to perform, the "threat" here is lawful and does not constitute coercion. The wrongfulness of coercion includes the wrongfulness of the purpose, the wrongfulness of the means, and the related wrongfulness of the ends and means. (1) The purpose is unlawful. If both parties make a false expression of intent to conspire and hypocrisy in order to circumvent the mandatory provisions of the law, and then one party feels inappropriate and wants to withdraw, the other party threatens to denounce its illegal acts. In this case, the act of denunciation is lawful, but the purpose of the parties is unlawful and constitutes coercion. (2) The means are unlawful. If the seller of the contract of sale fails to deliver the goods on time, the buyer threatens to complete the delivery on time or break his leg. In such a case, the buyer has the right to request the seller to perform the delivery obligation in accordance with the contract, but the threat of bodily harm is unlawful and constitutes coercion. If the buyer compels the seller to conclude a contract with it in this way, it constitutes a civil juristic act carried out under duress. (3) The connection between the ends and the means is unlawful. Even if the means and ends are lawful, but there is an imbalance between the means and the ends, and there is a lack of proportionality, all the circumstances should be considered, in particular whether the person exercising the coercion has a legitimate interest in the expression of his intention to promote, and whether it is appropriate to realize this interest by the means of coercion. For example, if the other party is coerced to sign a sales contract with oneself by threatening to report and expose the previous criminal act, although the act of reporting and exposing the crime and signing the sales contract itself are both lawful, there is no direct connection between the two and should also be found to be unlawful coercion.
In practice, the factor of causality should also be taken into account. There is a double causal link between the expression of intent made by the coerced person and the coercive act of the other party or a third party. On the one hand, coercive behavior makes the coerced person fearful; On the other hand, the coerced person makes an expression of intent contrary to his true intention out of fear. If the act of the coercive does not cause fear to the expressor, or if the expression of intent made by the expressor is not due to the fear, it does not constitute coercion, and the expressor has no right to claim the revocation of the legal act. Since the coercive act is committed against a specific person, the criterion of whether it constitutes coercion should be based on whether the specific victim and not the general person felt fear in the circumstances at the time.
[Practical issues]
In judicial practice, it should be noted that where other judicial interpretations have clear provisions on the responsibilities of guarantors and accountants, special provisions shall be applied first.
Article 17 of the Judicial Interpretation of the Guarantee System of the Civil Code stipulates that: "If the main contract is valid but the guarantee contract provided by a third party is invalid, the people's court shall determine the liability of the guarantor according to different circumstances: (1) if both the creditor and the guarantor are at fault, the liability borne by the guarantor shall not exceed one-half of the part that the debtor cannot repay; (2) If the guarantor is at fault and the creditor is not at fault, the guarantor shall be liable for the part that the debtor cannot repay; (3) If the creditor is at fault and the guarantor is not at fault, the guarantor shall not be liable for compensation. If the invalidity of the main contract leads to the invalidity of the guarantee contract provided by the third party, and the guarantor is not at fault, it shall not be liable for compensation; If the guarantor is at fault, its liability for compensation shall not exceed one-third of the debtor's inability to pay off. ”
Article 5 of the Several Provisions of the Supreme People's Court on the Trial of Civil Infringement Compensation Cases Involving Accounting Firms in Auditing Business Activities stipulates that: "If a certified public accountant issues a false report and causes losses to interested parties under any of the following circumstances in the audit business activities, it shall be determined that the accounting firm and the audited entity shall be jointly and severally liable for compensation: (1) malicious collusion with the audited entity; (B) knowing that the audited entity's financial accounting treatment of important matters is in conflict with the relevant provisions of the State, and does not specify; (C) knowing that the financial accounting treatment of the audited unit will directly harm the interests of stakeholders, and conceal or make false reports; (D) knowing that the financial accounting treatment of the audited unit will lead to a major misunderstanding of the interested parties, and do not specify; (E) knowing that the important matters of the accounting statements of the audited unit have false content, and do not specify; (F) the audited unit indicates that it makes a false report, and does not refuse. If the audited entity has the acts listed in items (2) to (5) of the preceding paragraph, and the certified public accountant should know it in accordance with the practice standards and rules, the people's court shall find that it is aware of it. Article 6 stipulates: "If an accounting firm issues a false report due to negligence in auditing business activities and causes losses to interested parties, the people's court shall determine its liability for compensation according to the extent of its negligence." If a certified public accountant fails to exercise the necessary professional prudence during the audit process, and any of the following circumstances exists, resulting in a false report, the people's court shall find that the accounting firm is negligent: (1) violating the provisions of Article 20 (2) and (3) of the CPA Law; (2) The certified public accountant responsible for auditing practices at a professional standard lower than that expected of an ordinary member of the industry; (3) There are obvious omissions in the audit plan formulated; (4) Failing to carry out necessary audit procedures in accordance with practice standards and rules; (5) Failing to add necessary audit procedures to confirm or eliminate possible signs of error and fraud when discovered; (6) Failure to reasonably apply the principle of materiality required by the practice standards and rules; (7) Failure to use the necessary investigation methods to obtain sufficient audit evidence in accordance with the requirements of the audit; (8) Knowing that the specific audit object that has a significant impact on the overall conclusion lacks the ability to judge, and fails to seek expert advice and directly forms the audit conclusion; (9) Misjudgment and evaluation of audit evidence; (10) Other conduct that violates the work procedures set forth in practice standards and rules. ”