Normative Interpretation on the Validity of Ultra Vires Acts of Representation
There are two ways to limit the authority of the legal representative:limitation stipulated by agreement and limitation imposed by law.The apparent feature of the authority of ultra vires acts varies under different ways of limiting the authority,thus the criterion for determining whether a counter-party is in good faith or not should be varied accordingly.When the limitation on the authority is stipulated by agreement,the counter-party may only need to examine the identity of the legal representative and is in good faith in the event of no gross negligence in being unaware of ultra vires representation.When the limitation on the authority is imposed by the law,the counter-party shall reasonably examine the resolution by an governing body of the legal person serving as the source of authority of the legal representative in addition to fulfilling the minimum obligation to examine the identity of the legal representative,and be regarded as being in good faith in the event of no slight negligence in being unaware of ultra vires representation.The good faith of the counter-party is presumed,and the legal person can present evidence to disprove it.In a case where the counter-party is in good faith,the legal person is always accountable for the appearance of authority and should bear the liability of apparent authority to the counter-party.However,the counter-party is entitled to waive the claim of apparent authority against the legal person and choose to ask the legal representative with knowledge of the ultra vires representation to assume responsibility for debt performance or ask the legal representative without knowledge of the ultra vires representation due to negligence to assume liability for compensation arising from negative reliance.In a case where the counter-party is in bad faith,the validity of ultra vires acts of representation is pending.If the legal person ratifies it,it is valid and the legal person should assume the responsibility for debt performance to the counter-party;if the legal person does not ratify it,it is invalid,and at this time,according to the rule of comparative negligence,the counter-party without knowledge of the ultra vires representation may either choose to apply the norms on unauthorized agency by analogy to ask the ultra vires representative with fault to assume corresponding liability or choose to ask the legal person with fault to assume corresonding liability based on contracting fault or tort.If the counter-party knows the ultra vires representation,neither the ultra vires representative nor the legal person shall assume liability to the counter-party in principle.After the legal person or the ultra vires representative assumes the liability to the counter-party,they should also server such liability respectively and correspondingly according to the rule of comparative negligence,and the final share of liability is proportional to the degree of their respective faults.
Legal RepresentativeUltra Vires RepresentationCounter-party in Good FaithLimitation Stipulated Through AgreementLimitation Imposed by Law
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