What Is the Right of Rescission?

The right of revocation is also called the "right of denial." The administrator of the bankruptcy property has denied the validity of the bankruptcy creditor's common interests during the statutory period before the bankruptcy declaration, and applied for the court to revoke it, restore the original status, and recover the right to transfer the property. The purpose of the establishment of the right of revocation is to prevent the common interests of creditors from being damaged by the bankrupt's improper disposal of property before the bankruptcy declaration. The denied behavior was effective before the bankruptcy declaration. After the bankruptcy declaration, the common interests of creditors may be damaged and the original state may be recovered or the property recovered. Bankruptcy laws in some countries classify the circumstances under which the right of revocation is exercised can be categorized into free denial, intentional denial, or crisis denial. ^[1]

Right of revocation

The right of revocation is also called the "right of denial." The administrator of the bankruptcy property has denied the validity of the bankruptcy creditor's common interests during the statutory period before the bankruptcy declaration, and applied for the court to revoke it, restore the original status, and recover the right to transfer the property. The purpose of the establishment of the right of revocation is to prevent the common interests of creditors from being damaged by the bankrupt's improper disposal of property before the bankruptcy declaration. The denied behavior was effective before the bankruptcy declaration. After the bankruptcy declaration, the common interests of creditors may be damaged and the original state may be recovered or the property recovered. Bankruptcy laws in some countries classify the circumstances under which the right of revocation is exercised can be categorized into free denial, intentional denial, or crisis denial. ^[1]

The right of rescission is a right in substantive law;

China (Eligible subjects are shareholders only, and there is no restriction on the qualifications of shareholders exercising the right of revocation)

Article 111 of the former "Company Law" stipulates: "If a resolution of the shareholders 'general meeting or the board of directors violates laws or administrative regulations and violates the shareholders' legitimate rights and interests, shareholders have the right to file a lawsuit in the people's court requesting the suspension of illegal acts and infringements."

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The requirements for the establishment of the creditor's right to cancel vary depending on whether the debtor's behavior is unpaid or paid. In the case of unpaid behavior, only objective requirements are required; in the case of paid behavior, both objective and subjective requirements must be provided.

It should be noted that when judging whether it constitutes a fraudulent act, the objective and subjective elements usually mentioned in theory should only be regarded as general theory and should not be applied mechanically. The subjective state, the objective state, and the effect of the behavior should be fully grasped, and an organic comprehensive judgment should be made.

I. Objective requirements

(1) The behavior of the debtor shall be required. according to"

Comparison of the right of revocation and the right of revocation of changeable and revocable civil acts

When examining the difference between the two types of revocation rights, the most natural approach is to examine its legal basis. Cancellation of changeable and revocable behavior

The legal characteristics of the right to revoke a changeable and revocable civil act are as follows:

One. A revocable contract means an untrue contract. A revocable contract is also inconsistent with the validity of the contract, but this inconsistency is reflected in the untrue expression of the meaning. For example, a contract established due to major misunderstanding, obvious unfairness, fraud, coercion, or danger to people. For a contract where the parties' intentions are not true, because it only involves the interests of the parties, it does not involve the legality of the contract and

I. Effect of exercise of the right of rescission

The determination of the validity of the creditor's right to rescission results from the determination of the effect on the creditor, the debtor and a third party.

The Japanese jurisprudence theoretically holds that according to the claim theory and such theory, the fraud is invalidated only within the limits of the joint guarantee and the relative relationship between the creditor and the beneficiary or the transferee as the party to the right of revocation. The res judicata power of rescission is not only inferior to that of the debtor who has not participated in the lawsuit of rescission, but also has no influence on the legal relationship between the debtor and the beneficiary, the beneficiary and the transferee. In the relative relationship with the defendant, the debtor did not obtain direct rights as a result. This is the so-called "relative effect of revocation" in Japanese jurisprudence. It can be seen that the relative effectiveness of revocation is reflected in two aspects: one is the "personal aspect", which is limited to the parties to the right of revocation and is inferior to the debtor; the other is the "financial aspect", which is only within the limit of maintaining the creditor's right . According to the "Interpretation of the Contract Law (I)", the debtor is used as the defendant in the litigation, and the beneficiary or assignee can be used as the third party in the litigation (Article 24). Obviously, there is no concept of the relative effect of "personal aspect". of. On the contrary, the res judicata power of the judgment of the right of rescission (the effect of the creditor's revocation exercise, which is determined by the determination of the judgment), and the creditor, the debtor, and the third party (the beneficiary or the transferee) are absolute effects. However, the scope of the Contract Law requiring the exercise of the right of revocation is limited to the creditor's claims (Article 74, paragraph 2), and the "Interpretation of the Contract Law (I)" also requires that courts at all levels conduct trials only on the portion claimed by the creditors (section 25 Article 1), the so-called "creditor's right" is the creditor's right to exercise the right of revocation, not the creditor's rights of all creditors. In this way, the "financial aspect" has a relative effect.

Attribution of effects

Once the debtor's behavior is revoked, it will lose its legal binding force. Anything that has not been paid in accordance with this act will, of course, be restored. If the payment has been made in accordance with this act, the person is obliged to restore the original status, and the property is returned if the property right of the payment property is returned to the payer; if the property right no longer exists, the price is returned. Effect. However, in order to limit the debtor's refusal to accept or impose further sanctions, it should be interpreted that the creditor who exercises the right of revocation should be subrogated. In addition, creditors can pay their claims through enforcement procedures. With regard to the subject matter received, the creditor exercising the right of revocation has no priority in compensation, but, as in the case of the subrogation of the creditor, the creditor may Claiming the right of set-off to achieve the same practical effect as priority compensation.

Where there is no offset, creditors exercising the right of rescission shall be compensated equally with other creditors. In this case, bond equality is a principle, but at the same time, there is also a problem of the actual performance order. If the debtor pays off the debtor in accordance with the debtor's arbitrary performance, or if other creditors do not claim the claim in time, the creditor who normally exercises the cancellation right will be satisfied and the creditor's right will be fulfilled. In this regard, other creditors must not raise objections. If the debtor does not perform it arbitrarily, if the creditor wants to realize his claim, he must follow the enforcement procedure. During the implementation, the executed person with the status of an enterprise legal person cannot pay off the debts due. According to the application of the creditor or the debtor, the people's court may declare the executed person bankrupt according to the law (Article 276 of Civil Opinions). If the person to be executed is a citizen or other organization, after the execution of the execution process, after the execution of the other has obtained the execution process, the property of the person to be executed shall be submitted before the property is liquidated (Article 298, paragraph 2 of the Civil Opinions). In addition, in the implementation stage, the phenomenon of execution competition may also occur. This is the content of the Civil Procedure Law and will not be described here.

Third, the burden of costs

The necessary expenses for the creditor to exercise the right of revocation shall be borne by the debtor (Article 74, paragraph 2 of the Contract Law). In addition, in accordance with Article 26 of the Interpretation of the Contract Law (1), necessary expenses such as lawyer's agency fees and travel expenses paid by creditors to exercise the right of revocation shall be borne by the debtor; if the third party is at fault, it shall be appropriately shared. Since the exercise of the creditor's right of revocation is to preserve the common guarantee of all creditors, such expenses can be used as public welfare expenses, giving priority to the effect of compensation on the debtor's total property; the creditor who exercises the right of revocation receives the subject matter and When expenses are incurred due to storage, a lien on the subject matter may be imposed on the right to claim the repayment of the expenses. In the case where the creditor is in fact receiving priority compensation, the necessary expenses for exercising the right of revocation no longer constitute public welfare expenses, so the above priority compensation right should not occur again. ^[2]

China's "General Principles of Civil Law" makes no provision for the elimination of the right of revocation. Article 55 of China's Contract Law stipulates: "The right of revocation is extinguished in one of the following circumstances: (1) the party with the right of revocation has not exercised the right of revocation within one year from the date when it knew or should know the reason for the revocation: (2) The parties with the right of revocation have expressed the knowledge of the reason for the right of revocation or gave up the right of revocation by their own actions. "This article stipulates two reasons for the elimination of the right of revocation, namely the passage of the period of exclusion and the right holder's waiver of the right of revocation.

Exclusion period

The one-year period in Article 55 of China's Contract Law stipulates that "the party with the right of revocation has not exercised the right of revocation within one year from the date of knowing or should have known the reason for the revocation", which belongs to the exclusion period when the right of revocation is eliminated. The exclusion period is the period during which the right persists, that is, the right exists within this period, and the right expires beyond this period. From the perspective of the extinction of rights beyond this period, the exclusion period is also the period of extinction of rights.

The determination of the start date of the exclusion period can distinguish between two cases:

1 If one party causes the other party to conclude a contract against the true intention by means of coercion or the danger of others, the right of rescission shall be counted from the day when the contract is established. Because in these cases, the parties will know the situation of coercion and danger at the time of conclusion of the contract, that is, the existence of the cause of revocation, and if they do not know, then the issue of coercion or danger will not be mentioned.

2 Contracts concluded by fraud, and contracts that are obviously unfair due to major misunderstandings, are counted from the date the parties know, should know, that they have been fraudulent, or know, should know, the facts of major misunderstandings or obvious unfairness. The so-called knowledge includes the fact that the parties should know the existence of the cause, even if they did not know it, because of their fault.

3 Article 74 If the debtor waives its due creditor's rights or transfers the property for free, the creditor may request the people's court to cancel the debtor's behavior. If the debtor transfers property at a significantly unreasonably low price, causing damage to the creditor, and the assignee knows the situation, the creditor may also request the people's court to revoke the debtor's behavior.

The scope of exercise of the right of revocation is limited to the creditor's claims. The necessary expenses for the creditor to exercise the right of revocation shall be borne by the debtor.

Article 75 The right of revocation shall be exercised within one year from the date on which the creditor knows or should know the reason for the revocation. If the right of revocation has not been exercised within 5 years from the date of the debtor's behavior, the right of revocation is extinguished.

When the exclusion period exceeds one year, the right of revocation is extinguished, and the right of revocation cannot be exercised.

Right of revocation

The right of revocation is a civil right enjoyed by the revocation right holder. Whether to exercise the right is the freedom of the revocation right holder, and the law does not interfere if the right cancellation right waives the right of revocation. Therefore, the second paragraph of Article 55 of China's "Contract Law" takes "the party with the right of revocation to make it clear after knowing the cause of the revocation or to abandon the right of revocation by his own act" as one of the reasons for the right of revocation. If the person withdrawing right expressly renounces the right to rescind, he shall indicate to the counterparty that if the right to revocation is waived by act, the waiver effect will take effect on the day of completion. ^[5]