1. Basic Case Information

Case Type: Lawyer Litigation Cases

Type of business: civil litigation

Court judgment date: April 6, 2017 .

Court name: People's Court of Beilun District, Ningbo City

Attorney's name: Ho Chi Minh

Law firm name: Zhejiang Boning Law Firm

Contribution (real name, unit + name): Civil and Commercial Major of Ningbo Lawyers Association

Committee Ho Chi Minh

Review (real name, level by level):

Search subject terms: private lending, debt-for-things agreement, liquid contract

2. Collection of case text

A case of dispute over a property company in Ningbo for debt repayment

【Introduction to the case】

On November 22, 2012, Chen Mou, the executive director, general manager and actual controller of a property company in Ningbo, borrowed RMB 6.2 million from Mr. Jin and another plaintiff, Mr. Wu. Later, Chen repaid the loan of 1.2 million yuan, and the remaining 5 million yuan (of which 2 million yuan belonged to Wu) has not been returned. Since October 22, 2014, Chen has served as the legal representative of a real estate company. Because Chen was unable to repay the loan, he proposed to use the house and parking space in Qingshuiluyuan, No. 755, Fengyang 1st Road, Xinqi Street, Beilun District, Ningbo City, which was developed by a real estate company to offset the loan, and Jin approved the plan.

On September 11, 2014, Chen instructed the sales manager of a real estate company, Yu, and Jin to sign three copies of the "Commodity House Sales Contract" (respectively: contract number: YS0052781, house code: 1977839; contract number: YS0052786, The house code is: 1978075; the contract number is: YS0052789, the house code is: 1977964), and will be located at Room 1001, Building 8, Building 9, Room 903, Building 10, No. 755 Fengyang 1st Road, Xinqi Street, Beilun District, Ningbo City, Building 8, Room 1001, Building 10, Room 1104 The house was compensated to Jin, and it was agreed that the above-mentioned house should be delivered to Jin before December 30, 2015. On September 15 of the same year, a real estate company registered the above-mentioned commercial housing sales contract online. Chen, the legal representative of a real estate company, has repeatedly made clear the above-mentioned fact of repaying debts with houses in the inquiries of the public security organs and the trial of the civil case of Ningbo Beilun District People's Court (2015) Yonglun Min Chu Zi No. 487. However, a real estate company failed to deliver the above-mentioned house to Jin at the time agreed in the contract.

On January 26, 2016, Jin sued to the court, requesting a real estate company to deliver the house and pay liquidated damages in accordance with the three "Commodity House Sale and Purchase Contracts".

During the litigation, Jin paid the difference (127,734 yuan) between the total price of the three "Commodity House Sales Contracts" and the 3 million yuan owed to Jin, and the liquidated damages stipulated in the "Commodity House Sales Contract". Abandoned, the remaining loan principal and interest are converted into the purchase price of the "Commodity House Sales Contract". After investigation, the interest does not exceed the limit of the loan interest rate.

The court ruled in favor of all Jin's claims.

【Agent opinion】

The agent believes that this case is a dispute over debt settlement, which is common in practice. The main points of contention in this case are: (1) whether the loan interest of Chen and Jin complies with the law; (2) whether the repayment of debts with property is prohibited by the current law; (3) whether Chen has the right to sell the property of a property company The commercial house on sale is used to pay off his debt to Jin; (4) Whether Chen pays the commercial house to Jin at the market price.

1. The loan between Chen and Jin is legal and valid, and the interest involved is protected by law.

The fact that Chen borrowed money from Jin existed, and the interest agreement was protected by law. The IOUs and remittance vouchers provided by Jin and the facts determined by the Beilun District People's Court in (2015) Yonglun Xingchu Zi No. 756 Criminal Judgment prove that: on November 22, 2012, Chen borrowed RMB 6.2 million from Jin. , on the same day, Jin remitted 5 million yuan to Chen's designated account (another 1.2 million yuan was remitted on the 11th of the same month). Since then, both parties have borrowed and repaid many times, with varying amounts, all of which were used for the daily operations of the company actually controlled or invested by Chen. Because the loan item of Chen Mou is actually jointly owned by Jin Mou and Wu Mou (a separate lawsuit), Chen Mou, Jin Mou and Wu Mou settled in September 2014 after the expiry date, confirming that 6 million yuan is still owed (of which interest is calculated on a per-unit basis). The loan principal × the monthly interest of 2.5%). After the settlement, Chen returned 1 million yuan to Jin and Wu, and the remaining 5 million (3 million of which belonged to Jin and 2 million to Wu.) was offset by the commercial housing of a real estate company.

Regardless of the evidence provided by Jin or the facts determined by the court in the effective judgment document in another case, the principal and interest of Chen's loan from Jin Mou are protected by law.

2. The act of repaying debt with property is different from the exile or liquid contract stipulated by the current law, and is not prohibited by the current law.

(1) A debt-for-things agreement is different from a liquid contract

There is a qualitative difference between a debt-for-kind agreement and a pledge-retention contract prohibited by the current law in terms of its establishment time: a debt-for-kind agreement is formed after the repayment period of the debt expires, and a liquid contract is formed before the expiry of the repayment period. Debt-for-Debt Agreement".

(2) The agreement between Jin and Chen to settle debts with property is not prohibited by law

1. Contracts or expressions of intent freely and authentically concluded between civil subjects are legal and valid

In September 2014, Chen Mou, Jin Mou and Wu Mou settled the principal and interest of the loan in November 2012, and made it clear that 3 million yuan of the remaining 5 million yuan would be used to compensate Jin Mou with the commercial housing of a real estate company. On September 11 of the same year, according to Chen's instructions, Yu Mou, the sales manager of a real estate company, signed three "Commodity Housing Sales Contracts" with Jin Mou. This is a free and real agreement between equal civil subjects. First, it terminates the original loan contract. Second, it establishes a commercial housing sales contract, and converts the loan principal and interest into the purchase price. This behavior is not prohibited by Article 186 of the "Property Law of the People's Republic of China", and the purpose of entering into the contract for the sale of commercial housing does not fall within the provisions of Article 186 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases" "As a guarantee for private lending contracts" stipulated in Article 24. In the absence of the circumstances stipulated in Article 52 of the Contract Law of the People's Republic of China, the commercial housing sales contract has legal effect.

2. On the basis of the debt repayment agreement, the counterparty of the contract is required to perform the "Commodity House Sale and Purchase Contract", which is not an exorcism or a liquid agreement.

The stipulations on exile or liquidation clauses in the Guarantee Law are mainly to prevent the secured party from taking advantage of others' dangers and dishonest acts that damage the legitimate interests of other creditors. Before Chen repaid the loan, he actually had the right to choose a variety of ways and opportunities to perform his contractual obligations, but he failed to perform his contractual obligations. " has a certain role in guaranteeing the performance of Chen's debts, but it cannot therefore be concluded that the agreement between the two parties is an exile or liquid quality clause stipulated in the Guarantee Law.

3. Chen has the right to use the commercial house on sale of a property company to pay off his debt to the creditor Jin.

In order to develop the real estate project where the commercial housing involved is located, in April 2012,

A real estate company in the development zone actually controlled by Chen and a hotel company in the development zone controlled by outsiders Hu and He invested in the establishment of a real estate company, with He as the legal representative. Due to the disagreement among the shareholders on the real estate sales plan of the project, on January 17, 2014, a hotel company in the development zone transferred all the equity it held in a real estate company to Chen at a discount of 65 million yuan, and signed an agreement. From February 2014, the real estate sales business involved in the case was managed and controlled by Chen, and the outsiders Hu and He withdrew from the operation and management of a real estate company. On October 22, 2014, the legal representative of a real estate company was changed to Chen. Based on this, Chen has the right to use the commercial house on sale of a property company to pay off his debt to the creditor Jin.

4. Chen compensated Jin with the market price of the commercial house involved in the case, which is in line with the rules of fair trade.

On September 11, 2014, a real estate company signed three "Commodity Housing Sales Contracts" with Jin, that is, Jin purchased from a real estate company 8 buildings with 1001 rooms, 10 rooms with 1104 rooms and 9 buildings with 903 rooms. The unit price is 8559.5 yuan respectively. / square meter, 8493 yuan / square meter and 8198.5 yuan / square meter. The two parties also agreed on other matters. Later, a real estate company filed and registered the three "Commodity House Sales Contracts" on Ningbo Residential and Real Estate Network, and in September 2014, the house price sold by a real estate company to the outside world was the same as that of a house with similar floors in Jin. The price is about 8500 yuan / square meter. The specific purchase price is directly offset by Jin's creditor's rights. The value of the house involved is basically similar to the market price at that time, and there is no discount or low price, which is in line with the rules of fair trade.

【Judgment Result】

The court ruled in favor of all of Jin's claims.

【Judgment Document】

As a legal creditor in a private lending relationship, Jin has the right to realize his due creditor's rights in the form of repayment of debts by agreement after settlement with the debtor for the principal and interest of the expired loan. On January 17, 2014, after a hotel company in the development zone transferred its equity in a property company to Chen, the company's shares were completely owned by Chen and the development zone development company actually controlled, and Since February 2014, the real estate sales business involved in the case has also been managed and controlled by Chen. In this context, Chen Mou and Jin Mou agreed to compensate Jin Mou for three sets of commercial houses on sale from a real estate company at the market sales price. A real estate company also registered the "Commodity House Sales Contract" on Ningbo Residential and Real Estate Network. Jin had reason to believe that Chen's actions represented a real estate company, so the legal consequences arising therefrom should be borne by a real estate company.

To sum up, the Commercial Housing Sales Contract signed by Jin and a property company is legal and valid, and the parties should perform their obligations as agreed, and support Jin's request for a property company to continue to perform the contract.

【Case Analysis】

A debt-for-debt agreement has something in common with a liquid contract, but we should pay more attention to and analyze the difference between the two in the agency analysis and judicial trial:

First, whether there is a guarantee contract. A liquid contract is a clause in a guarantee contract; a debt-for-things agreement does not have the nature of a guarantee, but is a modification of the performance of the debt. The things in the liquid contract are mortgages or pledges; the substitutes in the agreement on repayment of debts are the objects of performance of the debt.

Second, the relationship between the value of the thing and the amount of the debt. The key to the distinction between the two is whether the contract excludes the discount and liquidation procedures when the creditor's rights are realized. Article 35 of the Guarantee Law stipulates: "The creditor's rights guaranteed by the mortgagee shall not exceed the value of the collateral", which clarifies that the value of the collateral must be greater than or equal to the value of the creditor's right, even if the value of the collateral is abnormally higher than the creditor's right. The amount is not prohibited by law. The value of the property in the debt-for-things agreement is approximately equal to the amount of the creditor's right, and the equivalence can be based on the market price or the parties' true intentions when signing the debt-for-things agreement.

Third, the purpose of the contract. Traditional civil law holds that the purpose of creditors signing a liquid contract is to use their dominant position to obtain benefits greater than the creditor's right; while a debt-for-debt agreement is an agreement between equal civil subjects, based on the freedom and truth of the expression of will.

(Excerpted from: Liu Kun's "Agreement on Repayment of Debt with Property Should Not Be Recognized as a Liquid Contract", in "People's Judicial Cases", No. 2, 2014)

【Conclusion and Recommendations】

This case covers private lending, real estate sales, and disputes over the validity of contracts and changes in property rights. In an environment where transaction rules are gradually orderly and standardized, applicable laws must also keep pace with the times.

The basic principle of repayment with property is to respect the autonomy of the parties, that is, a contract of promise can be established and become effective if the parties agree to express their will. The non-liquidity rule cannot be used as a basis for denying the effect of debt-for-things. The unbalanced interests of debt-for-things can be adjusted by the rules of obvious unfairness. The mandatory ruling of debt-for-things in the field of civil enforcement can lead to changes in property rights, but the confirmation of debt-for-things Legal documents cannot cause changes in property rights. ("People's Justice Cases" 2017 Issue 17)

With the development of the market economy and the changes in the concept of transactions and financing of civil subjects, it is very common to use things to offset debts. However, in judicial practice, courts at all levels often have different understandings and applications of legal provisions, which often involve a game of interests. and the implementation of the spirit of private law, resulting in different judgment results. In the process of judicial practice, I hope to gradually unify the understanding.

At the same time, it is suggested that civil subjects should seek professional lawyers as soon as possible when encountering transactions that require repayment of debts with things, and conduct checks in advance in order to minimize transaction costs and transaction risks; it is recommended that judges make judgments based on the principle of unity of subjectivity and objectivity in judicial practice. Liquidity contracts, debt-for-things agreements before the expiry of the repayment period, and debt-for-things agreements after the expiry of the repayment period aim to unify the spirit of judicial adjudication and legislation.