Part.01
Registration for Zhong Xiaowei's Guide to Avoiding Pits
Register and choose the appropriate organizational form for the enterprise, and take the first step in entrepreneurship
Zhong Xiaowei partnered with his friend Mai Weihao to start a business and registered it as a partnership enterprise. Due to a decision-making mistake, the partnership enterprise suffered huge losses, and the two of them, as partners, have to bear the debts of the partnership enterprise.
According to Article 2 of the Partnership Enterprise Law of the People's Republic of China, a general partnership enterprise is composed of general partners, who bear unlimited joint and several liability for the debts of the partnership enterprise.
Peng Fajun reminds that different organizational forms of enterprises have their own advantages and disadvantages. As entrepreneurs, their ability to resist risks is relatively weak. It is recommended to adopt the form of a limited liability company to reduce entrepreneurial risks.
Part.02
Zhong Xiaowei's Guide to Avoiding Pitfalls for Loans
Strictly abide by the loan contract agreement and do not change the loan purpose
Zhong Xiaowei successfully applied for a loan for production, and after being persuaded by his friend Mr. Zhao, he invested this loan in other projects. Not long after, the bank discovered that Zhong Xiaowei had changed the purpose of the loan and requested early repayment. However, the investment project could not be suspended, and Zhong Xiaowei was caught in two troubles.
According to Article 37 of the Commercial Bank Law of the People's Republic of China, commercial banks shall enter into a written contract with the borrower for loans. The contract shall specify the type of loan, loan purpose, amount, interest rate, repayment period, repayment method, breach of contract liability, and other matters that both parties consider necessary to be agreed upon.
Peng Fajun reminds that after obtaining a loan, small and medium-sized enterprises should use the loan for the agreed purpose, especially not for high-risk investments, to avoid default and inability to repay the loan at maturity. Strictly adhering to the terms of the loan contract is the key to maintaining a good corporate credit.
Part.03
Zhong Xiaowei's Guide to Avoiding Pitfalls: Borrowing
Transfer with notes and protection of interests
Zhong Xiaowei has a long-standing business partnership with Ma Corporation. Once, Zhong Xiaowei entrusted Thomas to produce a batch of goods and agreed to settle the final payment after all were delivered. However, during the production of the goods, Mr. Ma requested a loan of 100000 yuan from Zhong Xiaowei citing difficulties in cash flow and promised to deduct it from the payment in the future. Zhong Xiaowei transferred the money out of trust. However, afterwards, Ma Corporation failed to complete all deliveries on time, and the cooperation between the two parties was suspended. Zhong Xiaowei demanded a refund of 100000 yuan of the loan, but Mr. Ma insisted that the amount was a deposit for the goods and had been used for early production, refusing to repay it.
According to Article 15 of the "Provisions on Several Issues Concerning the Application of Law in the Trial of Civil Lending Cases", if the plaintiff only files a civil lending lawsuit based on debt certificates such as promissory notes, receipts, and IOUs, and the defendant argues that the loan has been repaid, the defendant shall provide evidence to prove its claim. After the defendant provides corresponding evidence to prove its claim, the plaintiff should still bear the burden of proof for the existence of the loan relationship.
Peng Fajun reminds that when small and medium-sized enterprises have economic transactions with other enterprises, or when small and medium-sized enterprise owners have economic transactions with other enterprise owners, they should indicate the nature of the transaction as much as possible through bank transfer notes, WeChat chat records, and other forms to protect their legitimate rights and interests to the maximum extent possible.
Part.04.
Contract Amendment for Zhong Xiaowei's Guide to Avoiding Pits
There is a basis for disputes arising from the need to stamp the contract if it is altered
Zhong Xiaowei signed a contract with Party B's company and found that there was an issue with the delivery time during the signing process. He made modifications directly to the contract for convenience. However, during the execution of the contract, the second party company urged the goods according to the time before the modification and stated that if they did not deliver the goods again, they would sue. Zhong Xiaowei was deeply shocked by this and immediately pointed out that the delivery time had been modified. The second party company claims that the original procurement manager has resigned and cannot determine whether the modifications made at that time were legitimate, therefore it does not recognize the revised delivery time. The two parties were unable to resolve the dispute and ultimately sued to the court for mediation.
According to Article 543 of the Civil Code of the People's Republic of China, if the parties reach a consensus through consultation, the contract may be amended.
Article 544: If the parties have not clearly agreed on the content of the contract amendment, it is presumed that it has not been amended.
Peng Fajun suggests, "Once the contract is signed, it should not be easily amended or modified. If there is a need for amendment, it is recommended to affix the official seal or signature at the amendment location. If there is a need for amendment, it is recommended to modify it in the form of a supplementary agreement
Part.05.
Guarantee for Zhong Xiaowei's Guide to Avoiding Pits
Seals with risks in guarantee need to be carefully stamped
Mr. Li, an old friend of Zhong Xiaowei, asked him to provide a loan guarantee in the name of the company due to financial difficulties. At first, Zhong Xiaowei had some concerns, but Mr. Li assured him with confidence that it would only be a one-time turnover. Once the foreign goods were delivered, the repayment could be made, and he presented the foreign order as proof. Hou Zhong Xiaowei was persuaded and promised to help. Unexpectedly, this decision plunged his company into joint liability.
According to Article 686 of the Civil Code of the People's Republic of China, the methods of guarantee include general guarantee and joint liability guarantee. If there is no agreement or unclear agreement on the guarantee method in the guarantee contract, the parties shall bear the guarantee responsibility in accordance with the general guarantee.
Article 687, Paragraph 1: If the parties agree in a guarantee contract that the guarantor shall assume the guarantee liability when the debtor is unable to perform the debt, it is a general guarantee.
Article 688, Paragraph 1: If the parties agree in a guarantee contract that the guarantor and the debtor shall assume joint and several liability for the debt, it is a joint and several liability guarantee.
Peng Fajun suggests: "Before a company guarantees for others, it should fully understand the other party's business situation and debt paying ability, and not blindly believe the words of one party. Carefully choose the guarantee method and reasonably control the risks brought to the company by guaranteeing for others.
Source: Contribution from Guangming District Court of Shenzhen Intermediate People's Court
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