Whether a Guarantee Issued by a Representative Office in China of a Foreign Enterprise Is Valid

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· Document Number:No. 6 [2002] of the Civil Division of the Supreme People's Court

· Area of Law: Civil Law

· Level of Authority: Documents of Judicial Interpretation Nature

· Date issued:06-12-2003

· Effective Date:06-12-2003

· Issuing Authority: Supreme People's Court

· Status: Effective

 

Reply of the Supreme People's Court to the Request for Instructions on Whether a Guarantee Issued by a Representative Office in China of a Foreign Enterprise in the Name of the Representative Office Is Valid and What Civil Liability the Foreign Enterprise Assumes for the Guarantee
(No. 6 [2002] of the Civil DivisionIV of the Supreme People's Court, June 12, 2003)
The Higher People's Court of Shanghai Municipality:
Your Request for Instructions on Whether a Guarantee Provided by a Representative Office in China of a Foreign Enterprise in the Name of the Representative Office Is Valid and What Civil Liability the Foreign Enterprise Assumes for the Guarantee (No. 587 [2000], HPC, Shanghai) dated December 27, 2001, has been received. Upon deliberation by the Judicial Committee of this Court, the following reply is hereby made:
A representative office in China of a foreign enterprise is not a branch office or a functional department of the foreign enterprise, but is a representative of the foreign enterprise, externally representing the foreign enterprise. The foreign enterprise represented by the representative office should assume the legal liability for all operations of the representative office within the territory of China. In this case, Nantong City Foreign Trade Company entered into a principal-agent relationship with Jindalai International Trade Co., Ltd. through introduction by the Shanghai Representative Office of Daesang Trade Co., Ltd. In the entire operations, the Shanghai Representative Office of Daesang Trade Co., Ltd. negotiated and entered into a sales contract with and provided guarantee to Nantong City Foreign Trade Company always in the name of Daesang Trade Co., Ltd. The representative office also affixed the seal of Daesang Trade Co., Ltd. to the sales contract and its own seal to the letter of guarantee, representing Daesang Trade Co., Ltd. Daesang Trade Co., Ltd. should directly assume civil liability for the operations of its representative office.