Five situations in which a contract is invalid in the Civil Code

1. What are the five circumstances under which a contract is invalid in the Civil Code?

The contract is the true expression of the intention of both parties, the conclusion of the contract is based on the willingness of both parties, and the parties to the contract shall follow the principle of good faith.

The Civil Code stipulates that a contract is invalid under one of the following circumstances:

1) One party concludes a contract by means of fraud or coercion, harming the interests of the state;

2) Malicious collusion, harming the interests of the state, the collective, or a third party;

3) Concealing illegal purposes in a lawful form;

4) Harming the public interest;

5) Violating mandatory provisions of laws and administrative regulations.

One of the parties has the right to request the people's court or arbitration institution to modify or revoke the following contracts: (1) concluded due to a material misunderstanding; (2) It is obviously unfair at the time of the conclusion of the contract.

If one party uses fraud, coercion or taking advantage of the danger of others to cause the other party to enter into a contract contrary to its true intentions, the injured party has the right to request the people's court or arbitration institution to modify or revoke it. Where a party requests a modification, the people's court or arbitration institution must not revoke it.

2. Which institutions have the right to confirm the invalidity of the contract

The body that confirms the invalidity of the contract is statutory. The confirmation of the validity of a contract is related to whether the purpose of the parties to the contract can be realized and whether the legitimate rights and interests of the parties can be protected. At the same time, the confirmation of the validity of the contract is also related to the important issue of whether the transaction can be carried out normally and the stability of the social and economic order.

Therefore, a cautious attitude should be taken towards the confirmation of invalid contracts. Therefore, the law stipulates that the confirmation of invalid contracts belongs to the people's courts and arbitration institutions, and no other organization or individual has this right.

3. Handling of contracts found to be invalid

Once a contract is found to be invalid, it will not have legal effect from the beginning, so what should the parties to the contract do? The legal consequences of a contract being found to be invalid are as follows:

1. Return of property.

The parties may demand the return of property that has been delivered to the other party before the contract is confirmed to be invalid. It turns out that the money is paid back, and the goods are returned when the goods are delivered.

2. Discount compensation.

If the property cannot be returned or there is no point in returning the property, compensation can be made at a discount according to the value of the property obtained.

3. Compensation for losses.

After the contract is found to be invalid, if the loss is caused by the fault of one party, it shall also be liable for damages. If both parties are at fault, then they are liable for compensation according to the fault liability of both parties.

The standard of compensation for losses is limited to the actual losses.

4. In addition to the above-mentioned consequences, there are other non-civil consequences. For example, where malicious collusion harms the interests of the state, collectives, or third parties, the property obtained by malicious collusion should be recovered and returned to the state or to the collective or third party.

To sum up, according to the provisions of the Civil Code, an invalid contract is invalid from beginning to end and is not legally binding. The reasons for the invalidity of the contract include the lack of civil capacity of the parties, the contract is not the true expression of the intention of the parties, and the content of the contract violates the mandatory provisions of the law.

1. The civil juristic act carried out by a person without civil capacity is invalid;

It should be noted that all civil juristic acts carried out by persons without civil capacity are invalid, with no exceptions;

2. The conspiracy to falsely represent the invalidity of the act;

3. Violations of the mandatory provisions on the validity of laws and administrative regulations are invalid;

4. Civil juristic acts that violate public order and good customs are invalid;

The so-called public order and good customs refer to public order and good customs, that is, the social and public interests stipulated in Article 52, Paragraph 4 of the Contract Law. Where civil juristic acts that violate public order and good customs, such as gambling debts or solicitations, the law gives them a negative evaluation and finds the conduct invalid. Political order, financial order, etc., which involves the public interest of an unspecified majority, also belong to the category of public order;

5. Malicious collusion to harm the interests of others is invalid.

The 12 circumstances under which a contract is invalid under the Civil Code of the People's Republic of China are:

1. The contract signed by a person without civil capacity is invalid;

2. The contract signed by the actor and the counterparty with a false expression of intent is invalid;

3. If one party uses fraudulent means to cause the other party to sign a contract contrary to its true intentions, the defrauded party has the right to request the people's court or arbitration institution to revoke it;

4. The contract that violates the mandatory provisions of laws and administrative regulations is invalid;

5. The contract that violates public order and good customs is invalid;

6. The contract in which the actor maliciously colludes with the counterparty to harm the legitimate rights and interests of others is invalid;

7. Causing personal injury to the other party in the contract; The exemption clause for intentional or gross negligence causing damage to the property of the other party is invalid;

8. If the lease term in the contract exceeds 20 years, the excess part is invalid;

9. Illegal monopoly of technology, or infringement of others' technical achievements of the technical contract is invalid;

10. The parties beyond the scope of business conclude a contract that violates the state's restrictions on business and franchise and the prohibition of business by laws and administrative regulations is invalid;

11. Enterprises engaged in illegal activities in the name of loans are invalid;

12. The contract in which the seller maliciously colludes with a third party to enter into a separate contract for the sale and purchase of a commercial house and deliver the house for use, resulting in the buyer's inability to obtain the house.

Civil Code of the People's Republic of China

Article 506.

The following disclaimers in the contract are null and void:

1) Causing personal injury to the other party;

2) Intentionally or grossly negligently causing damage to the other party's property. Article 507.

If the contract is not effective, invalid, revoked or terminated, it shall not affect the validity of the provisions of the contract on dispute resolution methods.

The Civil Code stipulates that the circumstances of an invalid contract include the parties' lack of capacity for civil conduct, the contract is not the true expression of the parties' intentions, the contract violates the mandatory provisions of the law, and infringes on the interests of the state or the public interest. At present, there are only the following situations in which a contract is invalid under the provisions of China's legal system:

1) A contract signed by a person without capacity for civil conduct is invalid.

2) Contracts signed by the actor and the counterpart with false expressions of intent are invalid.

3) Contracts that violate the mandatory provisions of laws and administrative regulations are invalid. However, the mandatory provisions do not lead to the invalidity of the civil juristic act.

4) Contracts that violate public order and good customs are invalid.

5) Contracts where the actor maliciously colludes with the counterpart, harming the lawful rights and interests of others, are invalid.

1. The invalidity of the contract is illegal: (1) It must be in violation of the laws formulated by the current National People's Congress and its Standing Committee and the administrative regulations formulated by the National People's Congress and its Standing Committee in order to directly lead to the invalidity of the contract. (2) It must be a mandatory norm or arbitrary norm that violates laws and administrative regulations.

3) It must be a violation of the mandatory provisions of the heavy validity provisions.

2. The invalidity of the contract is relativeIn actual economic transactions and judicial practice, although some special contracts are illegal, they only involve the specific interests of specific parties or interested parties, and it is not necessarily appropriate to allow any entity to claim that the contract is invalid. Therefore, a distinction should be made between the absolute and relative nature of the invalidity of a contract. The invalidity of the contract does not mean that the contract is invalid.

The invalidity of a contract has no legal effect and cannot produce the legal consequences of a valid contract. In the case of an invalid contract, the parties can neither enjoy the rights nor bear the obligations agreed upon in the contract.

There are five main circumstances in which a contract is invalid in the Civil Code: First, a contract concluded due to a material misunderstanding. Major misunderstanding refers to the actor's misconception of the nature of the act, the other party, the variety, quality, specification, and quantity of the subject matter, etc., which makes the consequences of the act contrary to his own intentions and causes relatively large losses; The second is a contract concluded due to manifest unfairness.

manifest unfairness, which refers to a contract entered into by a party under circumstances of urgency or inexperience if the performance of the contract is materially unfavorable to it; The third is a contract concluded by fraud. Fraud refers to the act of one party deliberately informing the other party of false information, or deliberately concealing false information, inducing the other party to make a false expression of intent; Fourth, contracts concluded under duress. Coercion refers to the act of expressing untrue intentions due to the threat and coercion of others and falling into fear.

Fifth, the contract is concluded due to the danger of the person. Taking advantage of the danger of others refers to the actor taking advantage of the other party's urgent needs or precarious situation to force him to make an expression of intent to accept very unfavorable conditions contrary to his original intention.

The invalidity of a contract means that the contract is not effective due to the lack of certain requirements for its validity. The invalidity of a contract depends on the attitude and evaluation of the State towards the contract that has been established, reflecting the intervention of the State in the contractual relationship, and the outcome of the treatment of the non-formation of the contract is completely different from the outcome of the treatment of the invalidity of the contract.

The return of property without the validity of the contract means that the parties to the contract have the right to claim the return of the property that has been delivered to the other party after the contract is confirmed to be invalid or revoked, and the other party has the obligation to return the property that has been accepted.

When the contract is confirmed to be invalid, if the other party suffers losses due to the fault of one or both parties, it is also liable for damages.

Legal basisArticle 144 of the Civil Code is invalid for civil juristic acts carried out by persons without civil capacity.

Article 146:Civil juristic acts carried out by the actor and the counterpart with false expressions of intent are invalid.

The effectiveness of civil juristic acts concealed by false expressions of intent is to be handled in accordance with the relevant legal provisions.

Article 153:Civil juristic acts that violate the mandatory provisions of laws and administrative regulations are invalid. However, the mandatory provisions do not lead to the invalidity of the civil juristic act.

Civil juristic acts that are contrary to public order and good customs are invalid.

Article 154:Civil juristic acts where the actor maliciously colludes with the counterpart to harm the lawful rights and interests of others are invalid.