Abstract: The second sentence of Article 85 of the Chinese Civil Code provides for the protection of bona fide counterparties when a for-profit legal person's resolution is revoked. This provision has a clear problem model, unique application conditions, and methods of protection for counterparties that should be treated differently. A condition for the application of this provision that is different from the condition for the application of Article 61 Paragraph 3 and Article 170 Paragraph 2 of the Civil Code is that, as a result of the revocation of the resolution, the legal representative or the professional agent loses from the very beginning the right to conduct civil juristic acts with the counterparty in accordance with the resolution. As the transaction matters involved in resolutions can be divided into those provided for by law and those provided for by articles of association, a distinction should also be made between the various methods of protecting the counterparties of the transaction provided for in the second sentence of Article 85. In cases where a resolution involves a transaction within the statutory power of the governing body or an executive body, the counterparty should be protected by the standard of good faith and fulfillment of the obligation of examination at the time of the act; in other cases, the counterparty should be protected as long as he acts in good faith and fulfills the general duty of care in the transaction.

Keywords: for-profit legal person; resolution; bona fide counterparty; non-authorized agency; obligation of examination

Author: Zhu Guangxin, a research fellow and deputy head of the Civil Law Department of CASS Law Institute.

Source: 8 (2021) Journal of Law Application.