Identification and treatment of invalid contracts

Under any of the following circumstances, a contract or some clauses of the contract may be deemed invalid:

( 1)? A contract concluded by one party by means of fraud or coercion that harms the interests of the state;

Note: A contract concluded by one party through fraud or coercion belongs to a contract whose intention is untrue, and generally belongs to a contract that can be modified or terminated. A contract is invalid only when it harms the interests of the state.

(2) Contracts that collude in bad faith and harm the interests of the state, the collective or a third party;

(3) contracts that cover up illegal purposes in a legal form;

(4) Contracts that harm public interests;

(5) Contracts that violate the mandatory provisions of laws and administrative regulations;

(6) exempting the contract clauses that cause personal injury or property loss to the other party due to intentional or gross negligence.

(7) The provisions of the standard clauses exempting the other party from liability, aggravating the other party's liability and excluding the other party's main rights are invalid.

In addition, a civil act that a person without capacity for civil conduct or a person with limited capacity for civil conduct cannot independently implement according to law is an invalid civil act.

Therefore, the unqualified subject may also cause the contract to be invalid, for example:

(1)? If a person with no capacity for civil conduct or a person with limited capacity for civil conduct enters into a contract and the legal representative refuses to ratify it, the contract is invalid. The exception is: pure profit contracts and contracts that meet their age, intelligence and mental health do not need ratification, and the contracts are of course valid.

(b) The legal representative is unqualified, and the contract concluded by the counterpart is invalid;

(3)? A contract concluded by the legal representative or person in charge of a legal person or other organization beyond its authority shall be invalid if the other party knows or should know that it is beyond its authority.

How to deal with invalid contracts?

An invalid contract is not legally binding from the beginning, and the property obtained from the contract shall be returned; If it is impossible or unnecessary to return it, it shall be compensated at a discount. The party at fault shall compensate the other party for the losses suffered as a result. If both parties are at fault, they shall bear their respective responsibilities.

The treatment of invalid contracts is similar to the treatment of revocable contracts after they are revoked. The difference is that the illegality of an invalid contract determines that the law not only invalidates these acts, but also makes the parties bear civil liability for returning property and compensating losses, and infringes on the social order and social public interests protected by law. Therefore, the parties should also bear other legal responsibilities, that is, in addition to civil responsibilities, they may also bear administrative or even criminal responsibilities for their illegal acts, such as recovering the illegal income of the parties, turning it over to the state treasury, and revoking their business licenses.

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Legal basis: Article 497th of the General Principles of Civil Law of People's Republic of China (PRC) is invalid under any of the following circumstances:

(1) The provisions of Section 3 of Chapter VI in Part I of this Law and Article 506 are invalid;

(2) The party providing the standard terms unreasonably exempts or lightens its responsibilities, aggravates the responsibilities of the other party or restricts the main rights of the other party;

(3) The party providing the standard terms excludes the other party's main rights.

Article 498 If there is any dispute over the understanding of the standard terms, it shall be interpreted according to the usual understanding. If there are more than two interpretations of the standard terms, an interpretation that is unfavorable to the party providing the standard terms shall be made. If the standard terms are inconsistent with the non-standard terms, the non-standard terms shall be adopted.

Article 499 Where a reward person publicly declares that he will pay remuneration to the person who has completed a specific act, the person who has completed the act may require him to pay remuneration.

Article 500 In the process of concluding a contract, a party shall be liable for compensation if it has caused losses to the other party under any of the following circumstances:

(1) Concluding a contract under the guise of malicious negotiation;

(2) Deliberately concealing important facts related to the conclusion of a contract or providing false information;

(three) there are other acts that violate the principle of good faith.

Article 501 Business secrets or other information that should be kept confidential that the parties know in the process of concluding a contract shall not be disclosed or improperly used, regardless of whether the contract is established or not; Whoever divulges or improperly uses trade secrets or information and causes losses to the other party shall be liable for compensation.